Taiwan Semiconductor Earnings Preview: $100B Plan To Ease Global Chip Shortage

Taiwan Semiconductor Earnings Preview: $100B Plan To Ease Global Chip Shortage

For those who haven’t been following along closely, there’s a massive shortage of semiconductor chips across the globe stemming from last year’s COVID-19 related supply chain disruptions. The ongoing shortage is impacting major industries from auto manufacturing to cell phones to medical equipment to consumer electronic devices, and Taiwan Semiconductor Manufacturing (NYSE:) is by far the dominant global producer at the center of the crisis.

Despite running its plants at over 100% utilization, the company has still been unable to keep up with demand. Last week, TSM announced that it would invest a staggering $100B over the next three years to increase production capacity (including a $3.5B plant in the US) to address the current global backlog and accommodate a coming surge in demand around technologies like 5G service.

On Friday, the firm reported its monthly sales figures showing a strong 16.7% rise in Q1 revenues to $12.7B as the global economy starts to emerge from COVID-induced lockdowns, but traders are most focused on TSM’s full earnings report next week.

When are TSM earnings?

Thursday, April 15 before the opening bell

TSM earnings expectations

$0.95 in EPS on $12.86B in revenues in Q1

TSM technical analysis

After more than tripling off its pandemic lows in the lower-$40s in less than a year, TSM has struggled since its peak above $140 in mid-February. The stock spent six weeks in a near-term bearish channel, briefly dipping below its 100-day EMA near $112, before recovering back toward this week’s consolidation range in the low-$120s:

TSM Chart

Looking ahead, TSM has a lot riding on this week’s earnings report. A strong release, coupled with optimistic guidance for the rest of the year, could quickly take the momentum-driven stock back toward its highs in the $140 area. Meanwhile, a disappointing earnings update may prompt longer-term bulls to take profits and push the shares down to retest the year-to-date low near $108.

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