Taiwan Semiconductor's Resilience Shines Despite U.S. Tariffs, Analyst Says

Susquehanna analyst Mehdi Hosseini has reiterated his "outperform" rating for Taiwan Semiconductor Manufacturing Company (TSM.US) in a report released on Tuesday. Hosseini noted that the latest market survey indicates that TSM's wafer shipments and average selling prices (ASP) have remained stable. This stability in TSM's business operations suggests a resilience that exceeds market expectations, despite the negative sentiment caused by recent tariff measures announced by the U.S. president.

The analyst's assessment underscores TSM's ability to navigate through challenging market conditions, maintaining its competitive edge in the semiconductor industry. This positive outlook is further supported by the company's consistent performance in wafer shipments and ASP, which are critical indicators of its market position and financial health. The reiteration of the "outperform" rating reflects confidence in TSM's long-term growth prospects and its capacity to deliver value to investors.

Hosseini pointed out that according to a regulation regarding tariffs, if an imported product has at least 20% of its value "produced or transformed" within the U.S., the tariffs would only apply to the non-U.S. portion. Given that approximately 70% of TSM's revenue comes from U.S. customers, some of its chip products may meet the "U.S. content value" requirement, thereby reducing the overall tariff burden. "Considering that TSM's customers are primarily concentrated in the U.S., the actual impact of this new tariff policy on the company may be limited," Hosseini stated.

TSM currently holds a leading position in the high-end chip manufacturing sector and is a major producer of artificial intelligence chips. Its clientele includes tech giants such as NVIDIA, Apple, Qualcomm, and AMD. The company not only supplies core processors for Apple's iPhone but also manufactures mobile chipsets for Qualcomm and high-performance computing chips for NVIDIA and AMD.

Analysts believe that TSM's pivotal role in the global semiconductor supply chain, coupled with its close collaboration with U.S. tech companies, may provide a buffer against new trade barriers. Despite the ongoing geopolitical risks, TSM's current order book and business fundamentals remain robust. This resilience is a testament to the company's strategic positioning and operational excellence, which continue to drive its success in the competitive semiconductor market.