Taiwan Semiconductor Manufacturing Co., Ltd. is a joint venture between the Taiwan Provincial Government of China, Philips, and other private investors, registered in Taiwan Province of China on February 21, 1987. The company is currently the world's largest LED wafer foundry in the global semiconductor industry. As a foundry, the company manufactures semiconductors using its manufacturing processes based on customers' own or third-party proprietary integrated circuit designs. It offers a comprehensive range of wafer manufacturing processes, including those for manufacturing CMOS logic, mixed-signal, radio frequency, embedded memory, BiCMOS mixed-signal and other semiconductors. The company also provides design, mask making, probing, testing and assembly services.
TSM is in a bullish consolidation phase following a strong advance, with a positive long-term trend intact but experiencing short-term corrective pressure.
The current P/E of ~32x is high but can be justified by the company's high double-digit earnings growth. The P/B ratio of 10.85 is very high, reflecting the market's valuation of intangible assets and extraordinary profitability. The stock is trading near the upper end of its recent range ($313.80-$450.16) and within a calculated reasonable fair value range of $380-$440.
