On Monday, July 12, 2021, a Taiwan Semiconductor Weekly Options trade was recommended
to our members based on several catalysts.
of Original Taiwan
Semiconductor Weekly Options Recommendation Further Below.....
The Earnings Report Which Affected The Taiwan
Manufacturing, on Thursday, met earnings expectations for the second quarter.
It also guided higher for sales in the third quarter. But TSM stock dropped on
profit margin concerns.
Taiwan Semi earned 93 cents
per U.S. share in the June quarter, up 18% year over year and in line with
analyst estimates. The company's sales rose 28% to $13.29 billion in the second
"Our second-quarter business was mainly driven by
continued strength in HPC (high-performance computing) and automotive-related
demand," Chief Financial
Officer Wendell Huang said in a news release.
He added, "Moving into third quarter 2021, we
expect our business to be supported by strong demand for our industry-leading
5-nanometer and 7-nanometer technologies, driven by all four growth platforms,
which are smartphone, HPC, IoT (Internet of Things) and automotive-related
In local currency, Taiwan
Semi's sales increased 19.8% year over year while earnings rose 11.2%.
For the third quarter,
Taiwan Semi forecast revenue of $14.6 billion to $14.9 billion. The midpoint of
$14.75 billion topped Wall Street's consensus estimate of $14.57 billion. Its
sales in the year-earlier period were $12.4 billion.
chipmaker now expects sales to grow more than 20% this year, which is up from
the 20% target announced earlier in the year. Looking beyond 2021, Taiwan Semi
raised its revenue target for 2020-2025 to a compound annual growth rate of
about 15% from the previous 10% to 15%.
Recommended Taiwan Semiconductor Weekly
Options Trade: Buy TSM
JUL 23 2021 121.000 CALLS at approximately $2.55.
(Actually bought for $2.11)
Taiwan Semiconductor Weekly Options Trade
On Monday, July 12, 2021, “Weekly Options Members,” entered the Taiwan
Semiconductor Weekly Options trade
mentioned above for $2.11.
On Tuesday, July 13, the Taiwan
Semiconductor Weekly Options trade had
reached a high of $5.50 – up 160%.
After the report Thursday
morning, before the market opened, the Taiwan
Semiconductor Weekly Options trade declined
dramatically – displaying a sound reason to exit stocks before earnings where
profit is high – particularly in this unreliable market climate.
stock market gains are usually from growth stocks, which plow all of their
earnings back into big market opportunities.
fascinating sector today is the semiconductor manufacturing sector, companies
that can be thought of as the "picks and shovels" to the "gold
rush" that is the competition for leading-edge chips.
Semiconductors are now at the heart of many electronic devices that we
use regularly, be it personal computers (“PCs”), laptops, smartphones, and the
like. The automotive industry is also a major user of semiconductors as chips
are an important component of vehicles.
and therefore their manufacturers, are thought of as cyclical companies, over
the long term, their clear growth trend is up and to the right.
strong past performance, chip-reliant technologies such as artificial
intelligence, 5G, and the Internet of Things aren't slowing down anytime soon.
Yet semiconductor manufacturing is becoming more difficult and capital
intensive, and the semi equipment sector has consolidated and matured.
That has led
to fat profit margins for leading semi equipment companies and foundries – and Taiwan
Semiconductor Mfg. Co. Ltd. (ADR)(NYSE: TSM), the biggest semiconductor manufacturing company in the
world, is certainly at the
isn't an equipment manufacturer, but it is the world's leading pure-play
foundry, where other companies turn to get their leading chips made. Thanks to
its foundry-only business model, Taiwan Semi has recruited many of the top tech
companies in the world to use TSM as their main foundry. Garnering expertise
across many types of chips, from Apple's M1 chip to Qualcomm's
cellular modems to NVIDIA GPUs, Taiwan Semi has cemented itself as
not only the largest but also the most capable foundry in the world.
surpassed Intel in the race to a 7nm chip several years ago, and has
only cemented and extended that lead. After its 5nm chips first made it into
the first 5G iPhone last year, Apple is already sampling Taiwan Semi's 3nm
process, which should be ready some time in 2022, according to the Nikkei
Semiconductor Manufacturing's has obtained lead in advanced semiconductor
manufacturing over the past few years, and that lead only seems to be getting
bigger. Last month, rival Intel, one of the last chipmakers that manufactures
its own chips, admitted that it had run into a design flaw for its 7 nm
manufacturing process, and would be falling some 12 months behind schedule.
Intel had already ceded the leading-edge node lead to TSM in 2018, and that
lead only seems to be getting bigger.
manufacturing is hard, but TSM's years of experience making a wide variety of
semiconductors has given it a knowledge and process lead that other
manufacturers are struggling to match. In fact, rival GlobalFoundries threw in
the towel on competing with Taiwan Semi on the leading edge back in 2018. Intel
itself even hinted that it may outsource some manufacturing going forward,
likely to TSM. The U.S. government also recently subsidized TSM to build a new
fabrication plant in Arizona on national security grounds.
It seems TSM
has built itself a formidable moat in chip manufacturing.
1. Earnings to Back the Taiwan
Taiwan Semiconductor Manufacturing is confirmed to report earnings at
approximately 6:00 AM ET on Thursday, July 15, 2021. The consensus earnings
estimate is $0.89 per share on revenue of $12.96 billion; but the Whisper
number is higher at $0.96 per share.
Consensus estimates are for year-over-year earnings growth of 14.10%
with revenue increasing by 24.80%.
2. Better Than Expected June Sales.....
Friday, announced better-than-expected June sales. The news bodes well for the
chipmaker's second-quarter earnings report next week. TSM stock rose on Friday.
its sales last month rose 22.8% year over year in local currency to the
equivalent of $5.35 billion. And its sales jumped 32.1% from May. TSMC reports
financial results in New Taiwan dollars.
through June, TSMC's sales are up 18.2% from the same period last year.
"The strong finish to the quarter
fits with our view that: 1) foundry capacity remains tight, and 2) TSMC is
likely realizing the initial benefits from shipments of silicon for Apple's
next generation of iPhones," Wedbush Securities analyst Matt Bryson said in a note
to clients. He rates TSM stock as outperform.
“TSMC’s better pricing power on the
back of the capacity tightness should largely offset the margin pressure it is
seeing from the massive capex spending. Meanwhile, TSMC’s
technology/productivity breakthrough in EUV should enlarge its technology gap
with peers and insure a better cost structure for leading edge technology
analysts Roland Shu and Grant Chi wrote in a recent note.
is now sampling TSM's 3nm process, even though Intel is competing with TSM in
process technology and has ambitions to be a foundry for third parties itself.
Intel just announced yet another delay to its 10nm Sapphire Rapids server chip,
which will now be ready in early 2022 rather than 2021. Intel's 10nm process is
roughly equivalent to Taiwan Semi's 7nm, but since TSM is already manufacturing
5nm and will soon have 3nm in production, Intel is falling further behind. So
even Intel will probably be using TSM's services as it looks to claw back lost
market share against Advanced Micro Devices, a TSM client, while it aims
to catch up with its own capabilities.
like Intel are spending big in an attempt to catch-up, TSM recently announced
its own $100 billion three-year spending plan to cement its lead and meet
soaring demand for leading-edge chips. For perspective, TSM spent $17.2 billion
on capital expenditures last year, so it's essentially doubling that figure
over the next three years. With that much spending, investors can be pretty
confident growth will follow. Meanwhile, TSM's 1.5% dividend should follow on
that long-term growth path along with revenue and profits.
4. COVID-19 vaccine deal.....
Foxconn and TSMC said on Monday they had reached deals to buy 10 million doses
of Germany's BioNTech SE's COVID-19 vaccine, putting the total cost of the
highly politicised deal at around $350 million.
government has tried for months to buy the vaccine directly from BioNTech and
has blamed China, which claims the self-ruled island as its own territory, for
nixing an agreement the two sides were due to sign earlier this year. China
denies the accusations.
facing public pressure about the slow pace of Taiwan's inoculation programme,
the government agreed to allow Foxconn's founder Terry Gou, as well as Taiwan
Semiconductor Manufacturing Co (TSMC), to negotiate on its behalf for the
Chinese sales agent Shanghai Fosun Pharmaceutical Group Co Ltd said on Sunday
that an agreement had been signed, but did not give details of a delivery
Gou wrote on
his Facebook page that he was "gratified" the deal had been
completed, which will see Foxconn and TSMC each buy 5 million doses, to be
donated to the government for distribution.
Benefiting From Apple.....
"The strong results in the month of
June give us additional confidence in our projection for a significant
sequential uptick in sales in Q3 and through the second half of 2021 as TSMC
should continue to benefit from Apple's ramp of iPhone 13 production as well as
typical seasonal strength," Bryson said. Apple is on track to announce its
iPhone 13 handsets in September.
stock hit an all-time high of 145.65 in intraday trading on Friday. It ended
the regular session Friday up 1.3% to 145.11.
continue to benefit from strong pricing and margins because of tight foundry
capacity, Wedbush Securities analyst Matt Bryson said.
times there has been a shortage of semiconductors. When the coronavirus broke
out last year, people were compelled to stay at home and work remotely. This
led to a surge in demand for devices like laptops and PCs. Demand for gaming
also skyrocketed as people turned to at-home forms of entertainment and bought
gaming consoles as well as gaming hardware for their PCs. This, in turn,
shifted the supply of semiconductors to consumer electronics as automotive
factories were shut when COVID-19 intensified. But when the restrictions began
to gradually ease, demand for vehicles made a solid comeback as people
preferred to buy their vehicles and not travel via public transport to avoid
coming in contact with the virus.
semiconductor supply had already shifted, automotive manufacturers started
facing a shortage of chips. Even though the shortage mostly affected the
automotive segment, other industries like consumer electronics began to face
the crisis too as demand for such items remained high.
O’Donnell, a vice president research director at Forrester stated that factors
like growth in cloud computing and cryptocurrency mining will also bolster the
demand for chips, cited the article.
ongoing supply-related concern should bode well for chip manufacturers and also
for companies that manufacture equipment for chip making. Semiconductor sales
have remained robust in 2021 and per a report by the Semiconductor Industry
Association (“SIA”), global semiconductor industry sales rose 26.2% in May, on
a year-over-year basis, and reached $43.6 billion. The report further stated
that semiconductor sales increased 4.1% in May compared to April.
International Data Corporation (“IDC”) also predicted that the semiconductor
market is set to continue its solid growth this year. Per a report published by
the IDC on May 6, the worldwide semiconductor market is estimated to grow 12.5%
this year and reach $522 billion, following a rise of 10.8% in 2020.
Taiwan Semiconductor Manufacturing was
upgraded by equities research analysts at Susquehanna from a “negative” rating
to a “neutral” rating in a report issued on Wednesday. The brokerage presently
has a $105.00 price target on the semiconductor company’s stock, up from their
previous price target of $85.00. Susquehanna’s price objective points to a
potential downside of 11.33% from the stock’s current price.
TSM has also been the subject of a
number of research reports.....
- Argus began
coverage on shares of Taiwan Semiconductor Manufacturing in a research note on
Tuesday, June 22nd. They set a “buy” rating and a $150.00 price target on the
Securities began coverage on shares of Taiwan Semiconductor Manufacturing in a
research report on Monday, April 19th. They issued a “neutral” rating on the
Street analysts have issued ratings and price targets for Taiwan Semiconductor
Manufacturing in the last 12 months. The range between the high target price and low
target price is between $177 and $105 with the average target price sitting at $140.62.
currently 4 hold ratings and 6 buy ratings for the stock, resulting in a
consensus rating of "Buy."