TSM is set to grow in Q4
$Taiwan Semiconductor(TSM.US$Even with the expectations for semiconductors to slow in Q4 amid rising inventories, TSM guided revenue at the midpoint of $15.55B versus the consensus of $15.29B for the upcoming quarter. This guide translates to 20.5% year-over-year growth and 4.5% quarter-over-quarter. On a year-over-year basis, this is slightly below last quarter's 22.5% yearly growth, but the high-end of the guide has the potential to match it.
This comes amid rumors $Apple(AAPL.US$is expected to cut iPhone 13 orders by 10M, directly affecting TSM's largest business - smartphones.
The iPhone rumor would directly affect TSM as Apple makes up close to a quarter of the company's yearly revenue, while the production cut is rumored to be due to shortages from $Texas Instruments(TXN.US$and $Broadcom(AVGO.US$. Therefore, it would logically conclude iPhone cuts would affect TSM. If that was the case, TSM had a heck of a lot more revenue coming to it in Q4 otherwise. However, the more likely scenario is Apple never planned on 90M iPhone 13's this season.
Despite higher inventories supposedly slowing orders and rumors of production cuts, TSM is still slated to grow 4.5% quarter-over-quarter. The problem is the market's disconnect between what is happening in the semiconductor industry, the stock price, and what the future holds. The stock price has baked in supply chain headaches and past higher inventory history at these levels.
The market isn't going to be convinced otherwise, and it won't reward shares of Micron or Taiwan Semiconductor until things like demand and better expectations set in. But, we don't need the market to agree with how we value it today; we only need to know the market isn't right in the long run. Viewing the situation outside of historical context creates an opportunity the market isn't willing to see. The market is convinced of history repeating itself, but I see input variables as different, and therefore the same conclusion as the past isn't a given.
The sideways movement of TSM's stock is due to this and to accumulate shares here in anticipation the market moves past what it thinks is a doomed 2022 for semiconductors. Based on different factors and outside variables from past "cycles", it's clear higher inventory is not a one-to-one correlation to the industry's current situation.
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amacz : What about stocks
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