Why did TSM or GFS Global Foundry's stock soar 7% on Wednesday
Semiconductor stocks were rough on Wednesday, $Taiwan Semiconductor(TSM.US$ The stock prices of major companies such as these fell by more than 7% due to concerns about additional interference with the chip market by the US government.
However, one semiconductor stock is doing pretty well: $GlobalFoundries(GFS.US$ is a contract semiconductor manufacturer that Intel tried (and failed) to acquire a few years ago, but it has risen nearly 7%.
The US government's additional intervention in the chip market worries TSMC investors. Instead, it is giving hope to investors in Global Foundry. Global Foundry's (1) competes with TSMC, (2) is headquartered in the US, (3) conducts most of its business in the US, and (4) also has 40% of its manufacturing assets in the US.
$GlobalFoundries(GFS.US$ Are you going to buy stocks of
According to data from S&P Global Market Intelligence, out of Global Foundry's annual sales of 7.4 billion dollars, there is almost no sales from China.
However, this does not necessarily mean that Global Foundry's stocks are bought.
On the contrary, the price-earnings ratio is 33.5 times, and Global Foundry's stock price is higher than TSMC (31.1 times). Also, the company is not a very efficient competitor, and its gross profit margin (28%) is only half of TSMC's 53.6%. Global Foundry's growth rate is also slow at 10% compared to 21.5%.
These numbers may change slightly depending on government policies, but the simple truth is that when viewed from a balance point of view, TSMC is a superior semiconductor stock than GlobalFoundries.
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