TSMC Receives $6.6 Billion Infusion: Will It Propel Stock Prices to Record Peaks?
$Taiwan Semiconductor (TSM.US)$ experienced a rise on Monday following the announcement that the Commerce Department will provide up to $6.6 billion in federal funding for TSMC's Arizona factory.
The Biden administration announced that it would give the chipmaker a total of up to $11.6 billion. Of those funds, as much as $6.6 billion will be in the form of grants. In return, TSM is supposed to tremendously increase its production of chips in the U.S.
TSM and the CHIPS Act
The latest funding from the CHIPS and Science Act of 2022, endorsed by President Joe Biden, allocates part of $50 billion for developing semiconductor research and production in the U.S. This move aims to counter the industry's shift overseas and strengthen the U.S. as a leading chip manufacturer, especially after supply chain vulnerabilities were exposed during the pandemic.
Additionally, TSMC has disclosed plans to construct a third factory at its Phoenix location, boosting its projected investment in the region to a minimum of $65 billion upon completion. This expansion is part of the efforts to revitalize semiconductor manufacturing in the U.S., and TSMC is also eligible for up to $5 billion in loans.
The CHIPS and Science Act provides TSMC the opportunity to make this unprecedented investment and to offer our foundry service of the most advanced manufacturing technologies in the United States," TSMC Chairman Dr. Mark Liu said in a statement.
The Biden administration said that the lack of production of advanced chips in the U.S. threatens U.S. national security.
These are the chips that underpin all artificial intelligence, and they are the chips that are the necessary components for the technologies that we need to underpin our economy," Commerce Secretary Gina Raimondo stated.
Why TSMC Is So Important in the US Semiconductor Value Chain
TSMC's customers include technology companies like $Apple (AAPL.US)$ and $NVIDIA (NVDA.US)$, which could benefit from having a supplier providing key parts from inside the U.S. once the three factories are online by TSMC's estimates of 2025, 2028, and 2030.
Our U.S. operations allow us to better support our U.S. customers, which include several of the world’s leading technology companies. Our U.S. operations will also expand our capability to trailblaze future advancements in semiconductor technology."
TSMC's Upcoming Earnings
Investors are keenly awaiting TSMC's earnings report, scheduled for release on April 18, 2024. The company is projected to report an EPS of $1.29, a slight decrease of 1.53% from the same quarter last year. However, revenue is anticipated to grow by 9.96% to $18.38 billion compared to the prior year's quarter. For the full year, analysts predict earnings of $6.16 per share and total revenue of $85.41 billion, marking increases of 18.92% and 23.24%, respectively, from the previous year.
In terms of valuation, TSMC's Forward P/E ratio stands at 22.95, aligning with its industry average. Additionally, the PEG ratio is at 1.08, on par with the industry standard, factoring in expected earnings growth. Over the last month, the Zacks Consensus EPS estimate for TSMC has decreased by 0.2%.
Source: InvestorPlace, Yahoo Finance, Investopedia
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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EddyHamster : TSM all the way
EddyHamster : bye bye Apple....sold all......going to TSM now....
Kind Pumpkin EddyHamster : any good entry price?
loyal Fish_4375 : so TSM can pop on 6.6B infusion while INTEL get 10B infusion and falls/flat... market stopped making sense to me
Blue Jets loyal Fish_4375 : I used to own both.. I think that is because TSM is leading. The market like the winner because it makes them feel safe
EddyHamster loyal Fish_4375 : then who ask Intel to lose 7billion after infusion...while i am sure TSM after 6.6billion infusion will ensure it won't repeat like Intel.......Intel dig it own grave...
EddyHamster Kind Pumpkin : well...it seem everyone who post here stating it will be 32 soon....So wait until near 32 before picking up those falling sharp axe....
Zspurr : YES
Lovepieman loyal Fish_4375 : Most of it revolves around the current hype. Intel isn’t in the loop as much. They’re known for lagging behind. For example MU is at a premium because of its possible potential in the up coming years while making less revenue compared to 2022
james Isles EddyHamster : looking good
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