TSMC shares rose over 7% in morning trading

TSMC shares rose over 7% in morning trading.On Thursday, the Taiwanese company reported a better-than-expected 16% jump in December-quarter net income to a record NT$166.2 billion ($6 billion). It set a long-term target of at least 53% for gross margins. Sales in the quarter reached NT$438.2 billion, also a record, based on previously released monthly revenue numbers.

The chipmaker is now projecting average sales growth of 15% to 20% annually -- as much as double its previous expectation. It foresees sales of $16.6 billion to $17.2 billion in the first quarter alone, at least 5% ahead of projections.

Those numbers affirm TSMC’s pole position in the market during an unprecedented chip shortage triggered by the pandemic, a deficit that’s walloped the production of cars, mobile phones and game consoles. Asia’s most valuable corporation intends to continue spending heavily to maintain its technological lead over Intel Corp. to Samsung Electronics Co., safeguarding its market share as the growing number of connected devices like cars drive data centers and high-end computing.

What Bloomberg Intelligence Says:

TSMC’s capex plan for 2022 of up to $44 billion looks set to enable it to capture high growth in leading and specialty technology nodes and support its percentage sales-growth target of 15-20% CAGR. Its net cash position of $12 billion, coupled with consistent operating cash flow, appear likely to support its sizable capacity-expansion plan while maintaining its dividend payout. The company has the capacity to take on more debt without hurting its financial metrics significantly.

- Cecilia Chan and Dan Wang, analysts

“The semiconductor industry growth will continue to be fueled by the structural mega trends of 5G and high-performance computing,” Chairman Mark Liu told analysts on a conference call Thursday.