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In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating Taiwan Semiconductor (NYSE:TSM) in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate company's performance in the industry.
Taiwan Semiconductor Manufacturing Co. is the world's largest dedicated chip foundry, with over 60% market share. TSMC was founded in 1987 as a joint venture of Philips, the government of Taiwan, and private investors. It went public as an ADR in the U.S. in 1997. TSMC's scale and high-quality technology allow the firm to generate solid operating margins, even in the highly competitive foundry business. Furthermore, the shift to the fabless business model has created tailwinds for TSMC. The foundry leader has an illustrious customer base, including Apple, AMD, and Nvidia, that looks to apply cutting-edge process technologies to its semiconductor designs. TSMC employs more than 73,000 people.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Taiwan Semiconductor Manufacturing Co Ltd | 33.24 | 7.96 | 12.88 | 6.38% | $428.26 | $314.51 | 16.52% |
| NVIDIA Corp | 72.55 | 62.06 | 38.76 | 32.31% | $17.75 | $20.41 | 262.12% |
| Broadcom Inc | 68.36 | 10.56 | 16.73 | 3.02% | $5.58 | $7.78 | 42.99% |
| Advanced Micro Devices Inc | 231.12 | 4.59 | 11.41 | 0.22% | $0.9 | $2.56 | 2.24% |
| Qualcomm Inc | 26.02 | 8.90 | 6.04 | 9.79% | $3.08 | $5.28 | 1.23% |
| Texas Instruments Inc | 30.13 | 10.37 | 10.55 | 6.52% | $1.77 | $2.1 | -16.4% |
| ARM Holdings PLC | 575.64 | 33.04 | 53.93 | 4.35% | $0.06 | $0.89 | 46.6% |
| Intel Corp | 31.54 | 1.23 | 2.34 | -0.36% | $2.09 | $5.22 | 8.61% |
| Analog Devices Inc | 52.96 | 3.19 | 10.84 | 0.85% | $0.93 | $1.18 | -33.83% |
| Microchip Technology Inc | 25.70 | 7.21 | 6.42 | 2.25% | $0.47 | $0.79 | -40.62% |
| Monolithic Power Systems Inc | 96.63 | 18.67 | 21.66 | 4.45% | $0.1 | $0.25 | 1.51% |
| STMicroelectronics NV | 10 | 2.06 | 2.23 | 3.04% | $1.06 | $1.44 | -18.41% |
| ON Semiconductor Corp | 13.85 | 3.59 | 3.69 | 5.7% | $0.71 | $0.85 | -4.95% |
| GLOBALFOUNDRIES Inc | 31.45 | 2.48 | 3.97 | 1.19% | $0.54 | $0.39 | -15.86% |
| First Solar Inc | 26.20 | 3.88 | 7.53 | 3.48% | $0.36 | $0.35 | 44.83% |
| ASE Technology Holding Co Ltd | 23.24 | 2.77 | 1.39 | 1.94% | $23.55 | $20.87 | 1.46% |
| United Microelectronics Corp | 12.96 | 1.88 | 3.14 | 2.9% | $24.0 | $16.9 | 0.78% |
| Skyworks Solutions Inc | 19.89 | 2.66 | 3.74 | 2.91% | $0.31 | $0.42 | -9.29% |
| Universal Display Corp | 45.13 | 6.63 | 16.18 | 3.86% | $0.07 | $0.13 | 26.67% |
| MACOM Technology Solutions Holdings Inc | 123.20 | 7.56 | 12.42 | 1.45% | $0.04 | $0.1 | 6.98% |
| Lattice Semiconductor Corp | 36.53 | 11.48 | 11.46 | 2.15% | $0.03 | $0.1 | -23.6% |
| Cirrus Logic Inc | 25.88 | 3.73 | 3.97 | 2.48% | $0.07 | $0.19 | -0.27% |
| Average | 75.19 | 9.93 | 11.83 | 4.5% | $3.97 | $4.2 | 13.47% |
By closely examining Taiwan Semiconductor, we can identify the following trends:
At 33.24, the stock's Price to Earnings ratio is 0.44x less than the industry average, suggesting favorable growth potential.
The current Price to Book ratio of 7.96, which is 0.8x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
The Price to Sales ratio of 12.88, which is 1.09x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
The Return on Equity (ROE) of 6.38% is 1.88% above the industry average, highlighting efficient use of equity to generate profits.
The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $428.26 Billion is 107.87x above the industry average, highlighting stronger profitability and robust cash flow generation.
The gross profit of $314.51 Billion is 74.88x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.
The company's revenue growth of 16.52% exceeds the industry average of 13.47%, indicating strong sales performance and market outperformance.
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
When assessing Taiwan Semiconductor against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:
In terms of the debt-to-equity ratio, Taiwan Semiconductor has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.
This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.28.
For Taiwan Semiconductor, the PE and PB ratios are low compared to peers, indicating potential undervaluation. However, the high PS ratio suggests overvaluation based on revenue. The high ROE, EBITDA, gross profit, and revenue growth reflect strong financial performance relative to industry competitors.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
Posted In: TSM
