Exploring The Competitive Space: Taiwan Semiconductor Versus Industry Peers In Semiconductors & Semiconductor Equipment
Amidst the fast-paced and highly competitive business environment of today, conducting comprehensive company analysis is essential for investors and industry enthusiasts. In this article, we will delve into an extensive industry comparison, evaluating Taiwan Semiconductor (NYSE:TSM) in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing critical financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of 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 | 35.77 | 8.56 | 13.86 | 6.38% | $428.26 | $314.51 | 16.52% |
| NVIDIA Corp | 74.55 | 63.77 | 39.83 | 32.31% | $17.75 | $20.41 | 262.12% |
| Broadcom Inc | 73.50 | 11.35 | 17.99 | 3.02% | $5.58 | $7.78 | 42.99% |
| Advanced Micro Devices Inc | 263.94 | 5.24 | 13.04 | 0.22% | $0.9 | $2.56 | 2.24% |
| Qualcomm Inc | 26.65 | 9.12 | 6.19 | 9.79% | $3.08 | $5.28 | 1.23% |
| Texas Instruments Inc | 31.15 | 10.72 | 10.90 | 6.52% | $1.77 | $2.1 | -16.4% |
| ARM Holdings PLC | 597.10 | 34.27 | 55.94 | 4.35% | $0.06 | $0.89 | 46.6% |
| Intel Corp | 34.54 | 1.35 | 2.57 | -0.36% | $2.09 | $5.22 | 8.61% |
| Analog Devices Inc | 54.60 | 3.29 | 11.17 | 0.85% | $0.93 | $1.18 | -33.83% |
| Microchip Technology Inc | 26.45 | 7.42 | 6.61 | 2.25% | $0.47 | $0.79 | -40.62% |
| Monolithic Power Systems Inc | 98.97 | 19.12 | 22.19 | 4.45% | $0.1 | $0.25 | 1.51% |
| STMicroelectronics NV | 10.74 | 2.22 | 2.39 | 3.04% | $1.06 | $1.44 | -18.41% |
| ON Semiconductor Corp | 15.14 | 3.93 | 4.04 | 5.7% | $0.71 | $0.85 | -4.95% |
| GLOBALFOUNDRIES Inc | 32.88 | 2.60 | 4.15 | 1.19% | $0.54 | $0.39 | -15.86% |
| ASE Technology Holding Co Ltd | 25.36 | 3.02 | 1.52 | 1.94% | $23.55 | $20.87 | 1.46% |
| First Solar Inc | 24.47 | 3.62 | 7.04 | 3.48% | $0.36 | $0.35 | 44.83% |
| United Microelectronics Corp | 12.30 | 1.78 | 2.98 | 2.9% | $24.0 | $16.9 | 0.78% |
| Skyworks Solutions Inc | 20.71 | 2.77 | 3.90 | 2.91% | $0.31 | $0.42 | -9.29% |
| Universal Display Corp | 48.30 | 7.10 | 17.32 | 3.86% | $0.07 | $0.13 | 26.67% |
| MACOM Technology Solutions Holdings Inc | 128.21 | 7.87 | 12.93 | 1.45% | $0.04 | $0.1 | 6.98% |
| Lattice Semiconductor Corp | 37.60 | 11.82 | 11.79 | 2.15% | $0.03 | $0.1 | -23.6% |
| Cirrus Logic Inc | 27.60 | 3.98 | 4.23 | 2.48% | $0.07 | $0.19 | -0.27% |
| Average | 79.27 | 10.3 | 12.32 | 4.5% | $3.97 | $4.2 | 13.47% |
When conducting a detailed analysis of Taiwan Semiconductor, the following trends become clear:
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The stock's Price to Earnings ratio of 35.77 is lower than the industry average by 0.45x, suggesting potential value in the eyes of market participants.
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The current Price to Book ratio of 8.56, which is 0.83x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
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With a relatively high Price to Sales ratio of 13.86, which is 1.12x the industry average, the stock might be considered overvalued based on sales performance.
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With a Return on Equity (ROE) of 6.38% that is 1.88% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $428.26 Billion, which is 107.87x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.
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Compared to its industry, the company has higher gross profit of $314.51 Billion, which indicates 74.88x above the industry average, indicating stronger profitability and higher earnings from its core operations.
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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
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.
By considering the Debt-to-Equity ratio, Taiwan Semiconductor can be compared to its top 4 peers, leading to the following observations:
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Compared to its top 4 peers, Taiwan Semiconductor has a stronger financial position indicated by its lower debt-to-equity ratio of 0.28.
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This suggests that the company relies less on debt financing and has a more favorable balance between debt and equity, which can be seen as a positive attribute by investors.
Key Takeaways
For Taiwan Semiconductor, the PE ratio is low compared to peers, indicating potential undervaluation. The PB ratio is also low, suggesting a favorable price relative to book value. However, the PS ratio is high, signaling rich valuation based on sales. In terms of profitability metrics, Taiwan Semiconductor shows high ROE, EBITDA, and gross profit margins, reflecting strong operational performance. Additionally, the company exhibits high revenue growth, outperforming industry peers in generating top-line growth.
This article was generated by Benzinga's automated content engine and reviewed by an editor.