In-Depth Analysis: Taiwan Semiconductor Versus Competitors In Semiconductors & Semiconductor Equipment Industry

In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating Taiwan Semiconductor TSM in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate company's performance in the industry.

Taiwan Semiconductor Background

Taiwan Semiconductor Manufacturing Co. is the world's largest dedicated chip foundry, with over 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 33.24 7.96 12.88 6.38% $428.26 $314.51 16.52%
NVIDIA Corp 72.55 62.06 38.76 32.31% $17.75 $20.41 262.12%
Broadcom Inc 68.36 10.56 16.73 3.02% $5.58 $7.78 42.99%
Advanced Micro Devices Inc 231.12 4.59 11.41 0.22% $0.9 $2.56 2.24%
Qualcomm Inc 26.02 8.90 6.04 9.79% $3.08 $5.28 1.23%
Texas Instruments Inc 30.13 10.37 10.55 6.52% $1.77 $2.1 -16.4%
ARM Holdings PLC 575.64 33.04 53.93 4.35% $0.06 $0.89 46.6%
Intel Corp 31.54 1.23 2.34 -0.36% $2.09 $5.22 8.61%
Analog Devices Inc 52.96 3.19 10.84 0.85% $0.93 $1.18 -33.83%
Microchip Technology Inc 25.70 7.21 6.42 2.25% $0.47 $0.79 -40.62%
Monolithic Power Systems Inc 96.63 18.67 21.66 4.45% $0.1 $0.25 1.51%
STMicroelectronics NV 10 2.06 2.23 3.04% $1.06 $1.44 -18.41%
ON Semiconductor Corp 13.85 3.59 3.69 5.7% $0.71 $0.85 -4.95%
GLOBALFOUNDRIES Inc 31.45 2.48 3.97 1.19% $0.54 $0.39 -15.86%
First Solar Inc 26.20 3.88 7.53 3.48% $0.36 $0.35 44.83%
ASE Technology Holding Co Ltd 23.24 2.77 1.39 1.94% $23.55 $20.87 1.46%
United Microelectronics Corp 12.96 1.88 3.14 2.9% $24.0 $16.9 0.78%
Skyworks Solutions Inc 19.89 2.66 3.74 2.91% $0.31 $0.42 -9.29%
Universal Display Corp 45.13 6.63 16.18 3.86% $0.07 $0.13 26.67%
MACOM Technology Solutions Holdings Inc 123.20 7.56 12.42 1.45% $0.04 $0.1 6.98%
Lattice Semiconductor Corp 36.53 11.48 11.46 2.15% $0.03 $0.1 -23.6%
Cirrus Logic Inc 25.88 3.73 3.97 2.48% $0.07 $0.19 -0.27%
Average 75.19 9.93 11.83 4.5% $3.97 $4.2 13.47%

By closely examining Taiwan Semiconductor, we can identify the following trends:

  • At 33.24, the stock's Price to Earnings ratio is 0.44x less than the industry average, suggesting favorable growth potential.

  • The current Price to Book ratio of 7.96, which is 0.8x the industry average, is substantially lower than the industry average, indicating potential undervaluation.

  • The Price to Sales ratio of 12.88, which is 1.09x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

  • The Return on Equity (ROE) of 6.38% is 1.88% 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 107.87x above the industry average, highlighting stronger profitability and robust cash flow generation.

  • The gross profit of $314.51 Billion is 74.88x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.

  • The company's revenue growth of 16.52% exceeds the industry average of 13.47%, indicating strong sales performance and market outperformance.

Debt To Equity Ratio

debt to equity

The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.

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 assessing Taiwan Semiconductor against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:

  • 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 peers, indicating potential undervaluation. However, the high PS ratio suggests overvaluation based on revenue. The high ROE, EBITDA, gross profit, and revenue growth reflect strong financial performance relative to industry competitors.

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

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