Nothing to tie Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) down
Anyone who wants to buy a new computer will want to know if it has Intel inside. Today, both Windows and Mac operate on Intel processors. Its somewhat like ARM Holdings will have a presence in most smartphones but the brand will be backstage and will not be visible. So also is the case with Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM). Both Windows and Mac OS will have TSM semiconductors in them and they are almost ubiquitous to all computers.
Hearing is believing
When it comes to the technology industry, announcements of any future product launches are the best way to magnetize customers to the company stock and TSM does this with a great amount of verve. However, are all the announcements the truth? TSM is a front-running foundry-operator. It enjoys a small economic buffer which is limited only by a cheap market entry. It holds a definite technological-edge which no rival has been able to match, till date. Thus, present and future competitors have no choice but to watch from the side-wings as the company also retains pricing leverage.
From a financial viewpoint, Taiwan Semiconductor flaunts a solid background with rising revenue and no debt. However, its free cash and cash flow has been on the decline while there has been some stabilization in its net income.
When the paths cross
Competition has been upping the bets, and tech giants like Apple and Intel have been trying their best to oust TSM from its top position. Taking the rising competition into consideration, the company’s statements should be considered to be a part of its business strategy. And it’s steadily rising stock price, technological edge and stable finances speak volumes of the success of this strategy that it chooses to follow. Its competition continues to remain at very low levels and no company will be able to beat it at least in the next few years.
TSM and Intel manufacture entirely different products and cannot be considered direct competitors. However, Intel has been eyeing the semiconductor market and in the long run they will surely be drawing swords against each other.