Companies like Taiwan Semiconductor (NASDAQ:TSM) made hay while the sun shined. Though here, “sunshine” looked a lot like “chip shortage.” That prompted many chip makers to look for ways to put out more chips since every new chip minted was likely to sell. Now, Taiwan Semi is up once again, this time on the news that they’ve found a way to turn out more and into a market that’s hungry for every produced chip.
Taiwan Semi recently started production of chips in the three-nanometer line. According to the company’s chairman of the board, Mark Liu, the three-nanometer chip is highly in demand. Even if there weren’t a chip shortage in play, the latest chips out of Taiwan Semi would still have an edge in the market. Reports suggest that these are some of the most advanced chips the market has ever seen. Since Taiwan Semi serves as Apple’s (NASDAQ:AAPL) primary supplier, it would be well-placed to know its status in the broader market.
The move to produce more chips comes none too soon. Taiwan Semi recently noted that it’s expecting a sequential decline of roughly 15% for first quarter 2023 revenue. Fabrication systems note declines in capacity utilization, while wafer banks are seeing new highs. This suggests a possibility that the chip shortage may be righted around sooner than expected. However, Taiwan Semi landed Tesla’s (NASDAQ:TSLA) order for four-nanometer chips. This may make the end result better for Taiwan Semi than some might expect.
Taiwan Semiconductor enjoys some excellent support from analysts, though. Analyst consensus considers the stock a Strong Buy with an average price target of $104.00. This implies 37.35% upside potential.
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