Comparing Taiwan Semiconductor With Industry Competitors In Semiconductors & Semiconductor Equipment Industry

In today's rapidly changing and fiercely competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies. In this article, we will conduct a comprehensive industry comparison, evaluating Taiwan Semiconductor TSM against its key competitors in the Semiconductors & Semiconductor Equipment industry. By examining key financial metrics, market position, and growth prospects, we aim to provide valuable insights for investors and shed light on company's performance within the industry.

Taiwan Semiconductor Background

Taiwan Semiconductor Manufacturing Co. is the world's largest dedicated chip foundry, with almost 60% market share. TSMC was founded in 1987 as a joint venture of Philips, the government of Taiwan, and private investors. It went public as an ADR in the U.S. in 1997. TSMC's scale and high-quality technology allow the firm to generate solid operating margins, even in the highly competitive foundry business. Furthermore, the shift to the fabless business model has created tailwinds for TSMC. The foundry leader has an illustrious customer base, including Apple, AMD, and Nvidia, that looks to apply cutting-edge process technologies to its semiconductor designs. TSMC employs more than 73,000 people.

Company P/E P/B P/S ROE EBITDA (in billions) Gross Profit (in billions) Revenue Growth
Taiwan Semiconductor Manufacturing Co Ltd 29.33 7.02 11.37 6.38% $428.26 $314.51 16.52%
NVIDIA Corp 79.09 54.01 38.63 32.23% $14.56 $16.79 265.28%
Broadcom Inc 52.48 9.31 15.86 2.81% $4.61 $7.38 34.17%
Advanced Micro Devices Inc 235.68 4.68 11.64 0.22% $0.9 $2.56 -11.27%
Qualcomm Inc 25.77 8.81 5.98 9.79% $3.08 $5.28 1.23%
Texas Instruments Inc 30.37 10.45 10.63 6.52% $1.77 $2.1 -16.4%
Intel Corp 33.02 1.29 2.46 -0.36% $1.83 $5.22 -17.41%
ARM Holdings PLC 394.03 22.45 36.92 4.35% $0.06 $0.89 12.62%
Analog Devices Inc 38.24 2.99 9.31 1.3% $1.12 $1.47 -22.68%
Microchip Technology Inc 27.08 7.65 6.76 2.25% $0.39 $0.79 -24.91%
STMicroelectronics NV 10.75 2.21 2.40 3.04% $1.06 $1.44 -18.41%
Monolithic Power Systems Inc 86.78 16.77 19.45 4.45% $0.1 $0.25 1.51%
ON Semiconductor Corp 14.90 3.87 3.97 5.7% $0.71 $0.85 -4.95%
GLOBALFOUNDRIES Inc 33.65 2.67 4.25 1.19% $0.54 $0.39 -15.86%
ASE Technology Holding Co Ltd 21.17 2.52 1.27 1.94% $23.55 $20.87 1.46%
First Solar Inc 20.40 3.02 5.87 5.38% $0.36 $0.35 15.58%
United Microelectronics Corp 11.95 1.73 2.90 2.9% $24.0 $16.9 0.78%
Skyworks Solutions Inc 17.72 2.37 3.34 2.91% $0.31 $0.42 -9.29%
Lattice Semiconductor Corp 45.88 14.42 14.39 2.15% $0.03 $0.1 -23.6%
Universal Display Corp 37.75 5.55 13.54 3.86% $0.07 $0.13 26.67%
MACOM Technology Solutions Holdings Inc 114.16 7.01 11.51 1.45% $0.04 $0.1 6.98%
Rambus Inc 17.66 6.30 13.78 3.24% $0.05 $0.09 3.61%
Average 64.22 9.05 11.18 4.63% $3.77 $4.02 9.77%

After a detailed analysis of Taiwan Semiconductor, the following trends become apparent:

  • A Price to Earnings ratio of 29.33 significantly below the industry average by 0.46x suggests undervaluation. This can make the stock appealing for those seeking growth.

  • With a Price to Book ratio of 7.02, significantly falling below the industry average by 0.78x, it suggests undervaluation and the possibility of untapped growth prospects.

  • The stock's relatively high Price to Sales ratio of 11.37, surpassing the industry average by 1.02x, may indicate an aspect of overvaluation in terms of sales performance.

  • The Return on Equity (ROE) of 6.38% is 1.75% above the industry average, highlighting efficient use of equity to generate profits.

  • The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $428.26 Billion is 113.6x above the industry average, highlighting stronger profitability and robust cash flow generation.

  • Compared to its industry, the company has higher gross profit of $314.51 Billion, which indicates 78.24x above the industry average, indicating stronger profitability and higher earnings from its core operations.

  • With a revenue growth of 16.52%, which surpasses the industry average of 9.77%, the company is demonstrating robust sales expansion and gaining market share.

Debt To Equity Ratio

debt to equity

The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to equity.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

When evaluating Taiwan Semiconductor alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:

  • In terms of the debt-to-equity ratio, Taiwan Semiconductor has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.

  • This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.28.

Key Takeaways

For Taiwan Semiconductor, the PE and PB ratios are low compared to industry peers, indicating potential undervaluation. However, the PS ratio is high, suggesting rich valuation based on revenue. In terms of ROE, EBITDA, gross profit, and revenue growth, Taiwan Semiconductor outperforms its industry peers, reflecting strong profitability and growth potential.

This article was generated by Benzinga's automated content engine and reviewed by an editor.

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