TSM - Taiwan Semiconductor: I Deeply Regret Selling
2024-03-20 03:54:11 ET
Summary
- Taiwan Semiconductor Manufacturing is a major chip manufacturing company that gets the bulk of NVIDIA and Apple's business.
- TSMC's non-NVIDIA business can sustain growth even if NVIDIA's growth goes bust.
- TSMC's competitive position and strong financials make it an attractive investment which I value at $211.
- I sold all my TSM shares a little over a month ago. Though I realized an 18% total return, I consider the move to have been a severe mistake.
Taiwan Semiconductor Manufacturing ( TSM ) is one of the most important chip companies in the world. The contract manufacturer to NVIDIA ( NVDA ), Apple ( AAPL ) and other chip giants, it has one of the most important roles in the entire chip market. Thanks to its relationship with NVIDIA, TSMC allows investors to get indirect exposure to that company’s growth and success. At the same time, TSMC’s relationship with other large companies like Apple means that it doesn’t need for NVIDIA’s big orders to keep coming in, as a matter of survival. If NVIDIA were for whatever reason to disappoint investors, then TSMC would be OK. NVIDIA comprises 11% of TSMC’s order book ; if that were to go to zero, then TSMC’s non-NVIDIA business would require just 12.3% growth to make up for it. In the meantime, TSMC is far cheaper than NVIDIA is , trading at 26 times earnings and 22 times the best estimate of next year’s earnings....
Taiwan Semiconductor: I Deeply Regret Selling