An EM Stock Story: Taiwan Semiconductor Manufacturing Company
The Fundamental Growth and Core Equity team’s (FGC) research process focuses on five key attributes that are likely to lead to sustainable growth.
Viewed through the lens of that research process, Taiwan-based semiconductor firm TSMC is a stock to watch.
Senior Equity Research Analyst
The global semiconductor sector rose 771% from 2009 to 2019, benefitting from mega-trends that included smart phones, cloud computing, the Internet of Things, e-commerce, and e-Sports. More recently, semiconductors have been one of the strongest performing sectors during the COVID-19 pandemic, benefiting from both consumer stay-at-home activities and corporate work-from-home” demand. As technology increasingly touches virtually every aspect of our daily lives, the digital revolution continues.
Over the next decade, we believe the favorable trend for this sector will continue, supported by emerging technologies that include 5G, artificial intelligence, self-driving cars, and blockchain. Semiconductor companies should be well positioned to capture value from these innovations. And while there are always concerns about a Moore’s Law slowdown, innovation in chiplet-based design and 3D-packaging technology should help drive semiconductor technology migration to meet the huge demand.
Assessing Company Quality
The Fundamental Growth and Core Equity (FGC) team’s research process, which helps to identify investment opportunities, focuses on five attributes of a company that are likely to lead to sustainable growth (see Figure 1). These attributes are qualitative and forward-looking; our assessment is based on the expertise and judgment of our analysts and is therefore unique to the FGC team.