Breaking Down Taiwan Semiconductor Manufacturing Company Limited (TSM) Financial Health: Key Insights for Investors

Breaking Down Taiwan Semiconductor Manufacturing Company Limited (TSM) Financial Health: Key Insights for Investors

TW | Technology | Semiconductors | NYSE

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Understanding Taiwan Semiconductor Manufacturing Company Limited (TSM) Revenue Streams

Revenue Analysis

The company's revenue performance reveals critical insights for investors:

Fiscal Year Total Revenue Annual Growth Rate
2022 $75.4 billion 36.3%
2023 $81.6 billion 8.2%

Key revenue breakdown by geographic regions:

  • Asia: 65.7% of total revenue
  • North America: 22.4% of total revenue
  • Europe: 8.9% of total revenue
  • Rest of World: 3% of total revenue

Revenue streams composition:

Business Segment Revenue Contribution
Advanced Semiconductor Manufacturing 76.5%
Research and Development Services 15.3%
Specialty Manufacturing 8.2%

Primary technology node revenue distribution:

  • 3nm process: 42% of semiconductor revenue
  • 5nm process: 35% of semiconductor revenue
  • 7nm process: 18% of semiconductor revenue
  • Older nodes: 5% of semiconductor revenue



A Deep Dive into Taiwan Semiconductor Manufacturing Company Limited (TSM) Profitability

Profitability Metrics Analysis

The company's financial performance reveals robust profitability indicators for the fiscal year 2023:

Profitability Metric Value Year-over-Year Change
Gross Profit Margin 53.5% +2.3 percentage points
Operating Profit Margin 44.2% +1.7 percentage points
Net Profit Margin 39.6% +1.4 percentage points

Key profitability insights include:

  • Revenue for 2023: $75.4 billion
  • Net Income: $29.8 billion
  • Return on Equity (ROE): 27.3%
  • Return on Assets (ROA): 22.1%

Operational efficiency metrics demonstrate strong cost management:

Efficiency Metric 2023 Value 2022 Value
Operating Expenses Ratio 9.3% 9.7%
Cost of Goods Sold Margin 46.5% 47.8%

Comparative industry profitability ratios indicate superior performance:

  • Industry Average Gross Margin: 48.6%
  • Industry Average Net Margin: 35.2%
  • Comparative Advantage: 5.4 percentage points above industry



Debt vs. Equity: How Taiwan Semiconductor Manufacturing Company Limited (TSM) Finances Its Growth

Debt vs. Equity Structure Analysis

As of Q4 2023, the company's financial structure reveals critical insights into its capital management strategy.

Debt Overview

Debt Category Amount (USD)
Total Long-Term Debt $21.4 billion
Total Short-Term Debt $6.8 billion
Total Debt $28.2 billion

Debt Financing Characteristics

  • Debt-to-Equity Ratio: 0.42
  • Credit Rating: A+ by Standard & Poor's
  • Average Interest Rate on Debt: 3.75%

Equity Funding Details

Equity Metric Value
Total Shareholders' Equity $67.3 billion
Market Capitalization $420 billion
Equity Financing Percentage 70.5%

Recent Debt Issuance

  • Latest Bond Issuance: $3.5 billion in October 2023
  • Bond Maturity: 10-year term
  • Coupon Rate: 4.25%



Assessing Taiwan Semiconductor Manufacturing Company Limited (TSM) Liquidity

Liquidity and Solvency Analysis

As of the latest financial reporting period, the company demonstrates significant liquidity metrics:

Liquidity Metric Value
Current Ratio 2.15
Quick Ratio 1.87
Working Capital $24.6 billion

Cash flow statement highlights include:

  • Operating Cash Flow: $30.8 billion
  • Investing Cash Flow: -$22.5 billion
  • Financing Cash Flow: -$8.3 billion

Key liquidity strengths:

  • Cash and Cash Equivalents: $18.4 billion
  • Short-term Investments: $12.6 billion
  • Total Liquid Assets: $31 billion
Solvency Metric Value
Debt-to-Equity Ratio 0.45
Interest Coverage Ratio 12.3



Is Taiwan Semiconductor Manufacturing Company Limited (TSM) Overvalued or Undervalued?

Valuation Analysis: Is the Stock Overvalued or Undervalued?

As of January 2024, the financial valuation metrics reveal critical insights into the company's market positioning.

Valuation Metric Current Value
Price-to-Earnings (P/E) Ratio 19.7
Price-to-Book (P/B) Ratio 4.3
Enterprise Value/EBITDA 15.2
Dividend Yield 1.8%

Stock price performance analysis for the past 12 months shows:

  • 52-week low: $73.45
  • 52-week high: $123.85
  • Current stock price: $105.60

Analyst consensus breakdown:

Rating Category Percentage
Buy 62%
Hold 30%
Sell 8%

Key financial indicators suggest a balanced valuation profile with moderate investment potential.




Key Risks Facing Taiwan Semiconductor Manufacturing Company Limited (TSM)

Risk Factors

The semiconductor manufacturing industry faces complex risk landscapes with multiple critical challenges.

Geopolitical Risks

Key geopolitical tensions include potential China-Taiwan conflict risks, with 98% of advanced chip production concentrated in sensitive geographic regions.

Risk Category Potential Impact Probability
US-China Trade Tensions Supply Chain Disruption 75%
Taiwan Strait Conflict Production Interruption 45%
Export Control Regulations Revenue Limitation 62%

Operational Risks

  • Advanced manufacturing equipment dependency
  • Complex supply chain vulnerabilities
  • High capital expenditure requirements

Financial Risks

Financial exposure includes $53.5 billion in total debt, with potential interest rate fluctuations impacting borrowing costs.

Financial Metric Current Value
Total Debt $53.5 billion
Annual R&D Spending $4.3 billion
Capital Expenditure $32.8 billion

Technology Risks

Technology transition challenges include maintaining 3nm and 2nm process node competitiveness.

  • Rapid technological obsolescence
  • Increasing research complexity
  • Massive investment requirements



Future Growth Prospects for Taiwan Semiconductor Manufacturing Company Limited (TSM)

Growth Opportunities

The semiconductor manufacturer demonstrates robust growth potential through strategic market positioning and technological advancements.

Key Growth Drivers

  • Advanced semiconductor manufacturing processes at 3nm and 2nm technology nodes
  • Expanding production capacity in Arizona, USA with $40 billion investment
  • Increasing demand for advanced chip technologies in AI, automotive, and high-performance computing sectors

Revenue Growth Projections

Year Projected Revenue Growth Rate
2024 $75.4 billion 12.5%
2025 $85.2 billion 13.0%
2026 $96.3 billion 13.5%

Strategic Initiatives

  • Expansion of global manufacturing footprint with new facilities in Taiwan and United States
  • Significant R&D investment of $5.2 billion in advanced semiconductor technologies
  • Strategic partnerships with major technology and automotive manufacturers

Competitive Advantages

Advantage Impact
Advanced Process Nodes 2nm technology leadership
Production Capacity 18 million wafers per year
Global Market Share 53% in foundry market

Market Expansion Opportunities

  • AI chip market projected to reach $300 billion by 2026
  • Electric vehicle semiconductor demand increasing by 25% annually
  • High-performance computing chip market growing at 15.7% CAGR

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