Taiwan Semiconductor Is Saying Chip Demand Remains Strong (For Now)
The second-quarter earnings season is well underway. One of the first companies to report this period is Taiwan Semiconductor Manufacturing (NYSE: TSM), the largest semiconductor/computer chip manufacturer worldwide. TSMC hit the top end of its revenue guidance and generated phenomenal operating margins for the three months ending in June, causing shares to pop in the days following the release.
Investors have been worried about a downturn in semiconductor demand after the pandemic-induced boost to the industry. So far, these worries have not materialized. Taiwan Semiconductor's second-quarter results show strong demand for computer chips worldwide. But how long is that set to last? Let's see exactly what TSMC said in its second-quarter earnings report and conference call.
On July 14, TSMC released its Q2 earnings results. Revenue was up 36.6% year over year to $18.16 billion, hitting the higher end of its previous guidance for $17.6 billion to $18.2 billion. Operating margin came in at 49.1%, significantly beating TSMC's guidance for 45%-47% margins. This occurred because of continued operating leverage from its factories and gains in the value of the U.S. dollar compared to the Taiwanese currency. With a lot of customers like Apple and Nvidia headquartered in the United States, a rising dollar means TSMC gets paid more for the same product output, all else equal.
Source Fool.com
