TSMCTSM

Business Snapshot

• Taiwan Semiconductor Manufacturing Co. (TSM) is the world’s largest dedicated semiconductor foundry, manufacturing chips for global customers including Apple, NVIDIA, and AMD.
• The ADRC (American Depositary Receipt – Custodian) tracks the underlying Taiwan Stock Exchange shares (2330.TW) and is primary-listed on the NYSE. The price in USD reflects one ADS representing a certain number of common shares (typically 5:1, though the exact ratio is not provided).
• TSM has no direct US SEC-filed quarterly breakdowns for the most recent period; the latest full-year data is for fiscal 2024 (20-F filed 2024-12-31). The company operates in a cyclical semiconductor industry with secular tailwinds from AI/ML, HPC, and 5G.

Financial Trends

4-period trajectory (2021 → 2024) based on annual 20-F data.

• Revenue (derived = Gross Profit + Cost of Revenue):

  • 2021: $57.22B
  • 2022: $73.67B (+28.8%)
  • 2023: $70.60B (−4.2%)
  • 2024: $88.27B (+25.1%)
    → Strong recovery after a 2023 downturn; 2024 revenue is 54% above 2021.

• Net Income:

  • 2021: $21.37B
  • 2022: $32.32B (+51.2%)
  • 2023: $27.79B (−14.0%)
  • 2024: $35.30B (+27.0%)
    → Net margin: 37.4% → 43.9% → 39.4% → 40.0%. Profitability remains high, with a dip in 2023 and near-full recovery in 2024.

• Balance Sheet Strength:

  • Total assets: $134.3B → $204.1B (+52% over 4 years).
  • Shareholders’ equity: $77.6B → $130.5B (+68%).
  • Current ratio: 2.12 → 2.36 (improving liquidity).
  • Working capital: $30.6B → $54.3B (+77%).
  • Debt/Equity ratio not reported, but minimal debt is typical for TSM.
  • Inventory: $6.96B → $8.78B, mildly increasing but as a % of total assets it declined from 5.2% to 4.3%.

• Cash Flow & Capital Spending:

  • Capital expenditures: $30.3B (2021) → $35.2B (2022) → $31.0B (2023) → $29.2B (2024). CapEx is moderating after a peak in 2022, still very high.
  • Net change in cash: +$14.6B → +$9.0B → +$4.0B → +$20.2B. The 2024 jump indicates strong cash generation after a period of heavy investment.
  • Free cash flow data is not provided in the payload (blank), so no trend can be computed.

• Key Trajectory Observations:

  • Revenue and earnings are cyclical but on a clear secular uptrend; 2023 was the only down year.
  • Gross margin recovered from 54.4% (2023) to 56.1% (2024), still below the 59.6% peak in 2022.
  • The balance sheet has strengthened substantially, with equity growing faster than liabilities.
  • CapEx as a % of revenue declined from ~52% (2021) to ~33% (2024), freeing up cash flow.

Financial Health

• Liquidity: Current ratio of 2.36 and $54.3B in working capital provide ample cushion. No near-term solvency risk.
• Profitability: Net margin of 40% is exceptional and resilient. Gross margin above 56% indicates strong pricing power and cost control in advanced nodes.
• Capital Structure: With negligible debt (debt/equity not reported but historically low), TSM is conservatively financed. The company can fund its massive R&D and fab expansion with internal cash flow.
• Investment Phase: The $29.2B in 2024 CapEx, while substantial, is trending downward from the 2022 peak. This signals that the heavy expansion cycle for 3nm/5nm capacity may be nearing completion, potentially boosting free cash flow in coming years (assuming stable demand).
• Overall: TSM is in a very healthy financial position with strong earnings power, a fortress balance sheet, and a moderating investment cycle. The only caveat is the absence of recent quarterly data – the latest annual snapshot is already seven months old (Dec 2024).

Insider Activity

• Sentiment: Neutral (10) per the aggregated sentiment score.
• Transactions (28-day window ending 2026-07-28):
  • Buys: $704,840.42 across 19 transactions.
  • Sells: $3,761.00 across 1 transaction.
  • Net: +$701,079.42.
• Details:
  • The majority of insider purchases were in common shares (2330.TW) at prices between TWD 71.32 and TWD 76.62 (converted to USD in the filing). A single small ADS purchase of 10 shares at $405 was also recorded.
  • One small sell (50 common shares) was executed at $75.22.
  • Key insiders buying: Tien Bor-Zen (VP), Lin Shyue-Shyh, and a group of senior managers (Wang, Jang, Wu, Ku, Chuang, Lin Chris) each bought small lots around July 7 and July 19-23.
• Interpretation: Insider buying is modest in absolute terms and primarily in the local common shares, not the ADR. The pattern suggests confidence from management at current levels, but the scale is not large enough to signal a strong bullish conviction. No significant insider selling indicates no panic.

Multi-Timeframe Technical Context

Only 1D data provided.

• Trend (200-bar view): Price range from $266.82 low to $479.00 high, a +30.13% gain over the window. The current price $393.38 is above the 200-period SMA ($355.80) but below all shorter-term moving averages (EMA_12=411.64, EMA_26=419.64, EMA_50=417.52, SMA_20=423.88, SMA_50=425.57). This indicates a long-term uptrend but a sharp short-term downtrend.
• Momentum:
  • RSI_14: 27.31 (oversold, <30).
  • RSI_21: 41.38 (neutral, not oversold on longer lookback).
  • MACD: −7.999, signal −4.556, histogram −3.443 – bearish and accelerating downward.
• Volatility & Volume: ATR=15.46 (high intraday swing of ~4% of price). Current volume (9.33M) is well below the 20-day average (14.68M), suggesting reduced conviction during the recent decline.
• Bollinger Bands: Price (393.38) is near the lower band (382.59). The bands are wide (upper 465.17, lower 382.59), reflecting high volatility. A close below the lower band would signal a possible breakdown, while a bounce from this area could lead to a mean reversion back toward the middle band (423.88).
• Key Observation: The stock has sold off heavily from the $479 high, breaking below key moving averages, and is now approaching oversold territory on the 14-day RSI. The combination of a long-term uptrend (above 200-SMA) and short-term oversold conditions often precedes a bounce, but the bearish MACD cross warns of continued selling pressure.

Bull / Bear Cases

Bull Case

• Short-term (days): RSI_14 in oversold territory and price near the lower Bollinger Band historically suggest a mean-reversion bounce. Insider buying, while small, adds a sentiment tailwind. A move back toward $420 (SMA_20/50) is possible if the broader market stabilizes.
• Long-term (weeks to months): TSM’s financials are stellar – revenue grew 25% in 2024, net margins held at 40%, and the balance sheet is fortress-level. CapEx is declining, which could boost free cash flow. The ADR’s long-term uptrend (above 200-SMA) remains intact despite the pullback. The secular AI/high-end computing demand cycle supports the foundry leader. The current decline may be a buying opportunity for long-term investors.

Bear Case

• Short-term (days): The stock has decisively broken below all short- and medium-term moving averages. MACD is deeply bearish, and volume is dwindling. A test of the 200-SMA ($355.80) or even the recent session low ($266.82) is possible if selling accelerates. The oversold RSI alone is not a reliable buy signal in strong downtrends.
• Long-term (weeks to months): The 2023 revenue dip shows cyclical vulnerability; a potential global slowdown or trade restrictions (US-China) could pressure demand. The annual data is already 7 months old – current quarter trends are unknown. The ADRC structure means currency risk (TWD/USD) and foreign regulatory/political risks. The heavy insider buying in Taiwan common shares at ~$71-76 does not directly support the ADR price, which is currently $393.

Key Levels & Triggers

Key Triggers to Watch

1. Break above $423.88 (SMA_20 + BB middle) would signal a short-term reversal.
2. Break below $382.59 (BB lower) with high volume would confirm a continuation of the downtrend toward the 200-SMA.
3. RSI_14 crossing back above 30 – loss of oversold status may negate bounce potential.
4. Volume surge – a pickup above the 20-day average would indicate renewed institutional interest.
5. No new insider selling – continued small insider buys in common shares would support confidence.

No earnings or guidance data was included in the payload; all fundamental assessments are based on the 2021-2024 annual financials only.