Taiwan Semiconductor Posts Record First-Quarter Sales Amid Production Constraints

Taiwan Semiconductor Manufacturing (TSM), the world’s leading chip foundry, on Friday posted better-than-expected March-quarter sales as its factories continue to run at full capacity. But TSM stock fell following the news.




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Taiwan Semi said its first-quarter sales rose 16.7% year over year to 362.4 billion Taiwanese dollars, or $12.7 billion. That beat analyst estimates for 360.5 billion Taiwanese dollars. It was the company’s third straight quarter of record sales as the global economy rebounds from the coronavirus pandemic.

Taiwan Semi plans to report its full first-quarter earnings results on April 15.

The company makes chips for a host of leading fabless chip designers, including Apple (AAPL), Advanced Micro Devices (AMD) and Nvidia (NVDA).

TSM Stock Is Consolidating

In morning trading on the stock market today, TSM stock slipped 1%, near 122.25.

Since hitting a record high of 142.19 on Feb. 16, TSM stock has been consolidating for the past eight weeks. It has a buy point of 142.29, according to IBD MarketSmith charts. Lately, TSM stock has been trading around its 50-day moving average line, which is at the midpoint of its current base.

Wedbush Securities analyst Matt Bryson on Friday reiterated his outperform rating on TSM stock.

“We continue to see TSMC as well positioned moving forward in light of tightening IC (integrated circuit) availability,” he said in a note to clients.

Working To Increase Production

In a letter to customers recently, Taiwan Semi Chief Executive C.C. Wei said the company has been running its chip fabs at “over 100% utilization” for the past year, Bloomberg reported.

Last week, Taiwan Semi revealed plans to spend $100 billion over the next three years to increase its production capacity.

TSM stock is on IBD’s Leaderboard stock list.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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