Market Cap 100: TSMC retains top-ranked status

Staff reporter, Taipei; Steve Shen, DIGITIMES Asia 0

Credit: Digitimes

Taiwan Semiconductor Manufacturing Company (TSMC) retains its top-ranking status in the Asia Supply Chain Market Cap 100 ranking conducted by DIGITIMES Research for 2022.

The data shows that the top 10 most valued companies saw their market values decline significantly over the past year due to ebbing COVID-induced dividends, the war in Ukraine, Chinese lockdowns, rising interest rates, and inflation.

TSMC, the highest-valued company in the sectors surveyed, saw its market capital value drop to US$378.4 billion as of January 2023, a decline of US$197.8 billion or 34.3% from a year earlier. Samsung Electronics remained second, with its market value dropping 33.1% to US$262.8 billion. Toyota Motor took third and saw its market capital dip 24.4% to US$225.7 billion.

Among the top ten in 2022, LG Energy Solution took eighth, replacing SK Hynix. China-based Midea Group stayed in ninth place, and Tokyo Electron ranked twelfth, down from eighth. SK Hynix fell to fifteenth place.

Despite a reversal in the supply-demand of semiconductors in 2022 caused by volatile global economic and political factors, TSMC will likely achieve its goal of seeing its revenue grow 35% to hit a record high for the year, buoyed by orders from Apple, Qualcomm, MediaTek, AMD and Nvidia, and robust demand for its 5- and 4nm products.

Meanwhile, Samsung has said that the revenue and operating profit of its foundry business hit a record high in third-quarter 2022, with the trend to continue to the year's end, attributing the brisk performance to steadily rising yield rates of its advanced process nodes. While stressing that it has successfully ventured into mass production and kicked off shipments of its 3nm GAA products, Samsung has unveiled its roadmap for 2nm and 1.4nm process nodes. However, the relevant data released by Samsung still needs to be verified.

Intel has resumed its foundry business, with related foundry revenue reaching US$171 million in the third quarter of 2023, accounting for 1.1% of its total revenue. Intel has acquired Tower Semiconductor as part of its broader efforts to become the world's second-largest foundry house by 2030.

However, Intel stands in an unfavorable position to compete with TSMC regarding foundry orders and the number of clients, not even to mention that Intel is one of TSMC's clients. Intel may see its earnings prospects deteriorate due to its commitments for large-scale investments in the US and Europe and its shrinking foundry market share and shipments.

Despite increasing challenges from Samsung and Intel, TSMC's long-term prospects are bright, thanks to three primary factors. Firstly, over the years, TSMC has become even more competitive in terms of technology advancement and product differentiation, enabling it to continue to strive in the volatile business cycle while helping clients to achieve significant sales goals in the end market.

Secondly, TSMC has responded to and grasped the structural growth by enhancing its portfolios for high-performance computing applications by optimizing its ecosystem and process nodes. Thirdly, TSMC has maintained long-term strategic partnerships with its clients, collaborating closely on technology development, capacity planning and pricing to support clients' long-term needs and growth.

In 2023, TSMC is expected to meet a few challenges, including a diluted gross margin for the initial production of 3nm products, increased depreciation value, inflation-induced rising production cost, negative semiconductor business cycle, and overseas expansions.

However, TSMC expects its profitability to remain on a growth track in 2023, maintaining a CAGR of 15-20% over the next few years and a long-term gross margin of over 53%.