Taiwan Semiconductor (TSM) and Samsung (SSNLF) are two contrasting stocks. TSM stock peaked at
$145. It traded as low as $73.82 recently. Samsung also dipped but its outlook lifted shares. Which
company’s outlook matters more?
Samsung expects second-quarter operating profits to grow by 11% to KRW14T. This is slightly below
analyst consensus but is a strong outlook. Quarterly sales will rise by 20.94% Y/Y.
Taiwan Semiconductor expects revenue to grow by 19% Y/Y in June 2022. Markets barely reacted after
the July 8, 2022 announcement. Revenue will grow by 39.6% Y/Y between January through June 2022.
TSM will raise prices by at least 6% starting in January 2023. Demand is not easing. TSMC is not
experiencing any order cuts. Conversely, Micron (MU) issued a weak outlook.
TSMC and Samsung are both positive leading indicators. The chip sector is undervalued. Markets are
bracing for a severe technology spending slowdown. This assumption is likely wrong. TSM’s customers
include Apple (AAPL), Nvidia (NVDA), Intel (INTC), and AMD (AMD). Those firms may cancel wafer
orders. They may replace such orders on a different node.
Investors cannot assume the net orders will fall for TSMC or Samsung. Profit margins may not rise as
much on the older node. Both firms will offset this with price hikes.
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