Taiwan Semiconductor Indicates the Chip Industry Is Doing Just Fine

Chipmaking giant Taiwan Semiconductor Manufacturing (NYSE: TSM) just reported its second-quarter 2022 results, and it went a long way toward assuaging fears that the chip industry is headed for a sharp downturn. On the contrary, TSM grew at a healthy clip during the spring quarter. Far and away the largest semiconductor foundry in the world, TSM is indicating the good times for chip businesses are still rolling, and chip stocks look like a fantastic long-term bargain after getting clobbered the first half of this year.

If there is one takeaway from TSM's Q2 earnings report, it's this: The semiconductor industry is being propelled forward by industry, not consumers. After two years of heavy spending on work-from-home electronics, many households are tapping the brakes on new device spending. In fact, at the end of June, memory chipmaker Micron Technology said there is an oversupply of items like PCs on the market, and a brief downturn in consumer electronics demand would ensue.

But that doesn't mean all spending on chips is in for a correction. On the contrary, high-performance computing (cloud, AI, etc.), automotive, and industrial Internet of Things is still doing just fine. As a result, TSM's Q2 revenue increased 43.5% year over year to 534 billion New Taiwan dollars (or up 36.6% to $18.1 billion in U.S. dollars, lower due to foreign currency exchange issues). Gross profit margin on product sold was 59%, compared to just 50% last year. And net income and earnings per share both increased 76.4% in New Taiwan dollars.

Source Fool.com