Taiwan Semiconductor Manufacturing Company Limited (TSM)
| Previous close | 80.52 |
| Open | 80.49 |
| Bid | 79.53 x 800 |
| Ask | 79.59 x 900 |
| Day's range | 79.42 - 80.79 |
| 52-week range | 40.25 - 84.00 |
| Volume | 6,395,771 |
| Avg. volume | 11,229,492 |
| Market cap | 381.152B |
| Beta (5Y monthly) | 0.87 |
| PE ratio (TTM) | 35.73 |
| EPS (TTM) | 2.23 |
| Earnings date | N/A |
| Forward dividend & yield | 2.85 (3.50%) |
| Ex-dividend date | 18 Jun 2020 |
| 1y target est | 67.00 |
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- Bloomberg
A Taiwan Tech Company Bigger Than Foxconn (Not TSMC)
(Bloomberg Opinion) -- When the U.S. administration moved in May to block Huawei Technologies Co. from accessing American technology to manufacture its chips, shares of Taiwan Semiconductor Manufacturing Co. dropped.Huawei, the Chinese phone and telecoms equipment giant, was one of the custom chipmaker’s biggest clients and losing those orders was thought to pose a huge threat to revenue. Yet that same day, shares of another Taiwanese company jumped as much as their daily 10% limit, the most in almost five years.MediaTek Inc., a designer of chips used in electronics including smartphones, has since climbed another 78% in Taiwan and by late July overtook the market value of Hon Hai Precision Industry Co., the Taipei-based flagship of iPhone maker Foxconn Technology Group. At the close of trade Wednesday, MediaTek was Taiwan’s second-biggest company, worth NT$1.2 trillion ($40 billion). The new rule from the Trump administration stated that chip manufacturers such as TSMC cannot use American know-how to make semiconductors for Huawei, accusing the Chinese company of undertaking “malign activities contrary to U.S. national security and foreign policy interests.” Since U.S. equipment, software and materials are an irreplaceable part of chip manufacturing, the edict meant that Huawei can no longer use its own chips in its devices.But Huawei’s smartphones, routers, switches and other hardware can use chips designed by outside parties, even if they’re manufactured with American technology. Enter MediaTek.It designs 5G chips for both smartphones and base stations, and has them manufactured by TSMC, making it the perfect replacement for the Huawei-designed chips that can no longer be made.Already a supplier to the Chinese company, MediaTek’s orders from Huawei are reported to have jumped after the restrictions, spurring analysts to raise their outlook for 2020 revenue by 14% and for next year by 29%.This wasn’t some fluke, though, or merely being in the right place at the right time. Founded by M.K. Tsai, a U.S.-educated electrical engineer and early leader of Taiwan’s chip industry, MediaTek has made a career out of being the backup quarterback in the world’s most ubiquitous devices.Once a division of United Microelectronics Corp., TSMC’s smaller rival in the chip foundry business, the company was spun off and listed in 2001. All three are based in Taiwan’s Hsinchu Science Park. When it gained independence, CD-ROMs and DVDs were hot, and MediaTek made the chips which powered them. It’s been riding the electronics revolution ever since and Tsai was later named among the world’s best-performing chief executive officers by the Harvard Business Review. When Blu-ray players were introduced, it became a key supplier of components. By the time Bluetooth became standard in gadgets, later to include mobile phones, MediaTek had cheaper offerings than its rivals. Wi-Fi was another big boon to the company.In many cases, MediaTek didn’t have the first or even the best product in the market, but it consistently found a way to balance performance with cost, and leverage a huge uptake in a hip new technology that would invariably force prices down. Competitors were often left flat-footed, offering higher-priced chips when MediaTek’s components were considered acceptable while being far cheaper.When mobile telephony came along, particularly the 3G technology that enabled the mobile internet, MediaTek was recognized as a serious player. Before long, it was not only designing networking chips but the core processor that runs a smartphone or tablet, treading on turf dominated by Qualcomm Inc. It went one step further, offering reference designs — recipes for how to make a smartphone — whereas Qualcomm tended to just sell the chip and let device manufacturers figure out the rest.MediaTek’s semiconductors, and Google’s free Android operating system, gave rise to a boom in smartphones that could be made for as little as $20 apiece. It has since developed high-end chips with artificial intelligence capabilities. One parlor trick: using MediaTek-powered phones to follow human movement and mimic it on a robot.Now, there’s 5G.With Chinese smartphone brands like Huawei, Xiaomi Corp. and Oppo already clients, and China itself being the earliest adopter of this faster networking standard, MediaTek stands poised to benefit. It helps that its closest rival, Qualcomm, is an American company in the midst of a U.S.-China tech cold war.Its new mobile chipsets may be installed on more than 40% of 5G devices launched in China, Bloomberg Intelligence analyst Charles Shum writes, adding to the strength it already enjoys in the market for Wi-Fi and power-management components it supplies to the likes of Amazon.com Inc., Xiaomi and Alibaba Group Holding Ltd.MediaTek has built a good business from being a smaller, less-famous name from a little-known place in Taiwan. With Beijing-Washington tensions heating up, it now finds itself at the center of the action. The trick will be to remain indispensable without becoming collateral damage.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
