Sometimes, on a trading day, events take place that don’t have an immediate explanation. Worse, they might even behave contrariwise to reality itself. We saw that with chip stock Taiwan Semiconductor (NASDAQ:TSM), which offered good news on August revenue but was spurned anyway, as investors gave it a fractional loss in Friday afternoon’s trading.
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The news out of Taiwan Semiconductor was solid and featured not only quality sales numbers but also sales numbers that represented a boost over July’s numbers. Taiwan Semi posted around $5.89 billion in revenue, which was up 6.2% against July’s figures. However, that figure is also down 13.5% against August 2022’s figures, which tainted the good news somewhat.
There was other good news as well, as MediaTek—the biggest mobile chip maker in Taiwan—noted that it would be turning to Taiwan Semi’s best technologies to make MediaTek chips for devices coming out starting next year. It’s an early adopter of 3-nanometer technology, and on that front, MediaTek is now in the same league as Apple (NASDAQ:AAPL), which also brought in Taiwan Semi systems.
However, all is not good news here. We already saw how orders are down against this time last year. And there are also deep, deep concerns about Taiwan’s ability to survive should China stage its long-stunted ambition to retake Taiwan. While many believe that Taiwan’s staggering focus on chipmaking will spare it from the worst of an invasion, others believe the so-called “silicon shield” is largely illusory. Just who is right remains to be seen, but there’s little doubt that a Chinese invasion of Taiwan would at least destabilize the chip market, if not ruin it outright.
At any rate, analysts are quite on board with Taiwan Semiconductor. With four Buy ratings and one Hold, Taiwan Semiconductor stock is considered a Strong Buy. Further, Taiwan Semiconductor stock offers investors 39.11% upside potential with an average price target of $125.
