Tariff effects are still front and center in many investors' minds. As we apach Aug. 1, the date when many recical tariffs take effect, the entire economic landscape could shift.
Although deals are being announced, many questions remain regarding their impact. However, there is one company that stands out by saying it hasn't seen any effect: Taiwan Semiconductor (TSM 1.
Taiwan Semiconductor's CEO C. Wei stated on its Q2 conference call that they "have not seen any change in our customers' behavior so far" regarding tariffs.
This's a significant development for TSMC, but does it suggest that the rest of the market is overreacting to tariffs. Image source: Getty Images.
Semiconductors aren't subject to recical tariffs There are a few to understand regarding tariffs and semiconductors.
First, semiconductors are currently exempt from all recical tariffs (something worth watching), in light of current trends. Additionally, they're excluded from the base 10% blanket tariff.
However, that could shift as the Aug (which is quite significant). 1 recical tariff date arrives.
If those tariffs are implemented, other goods could be subject to higher tariff rates than semiconductors.
Furthermore, This means investors need to be cautious drawing conclusions how tariffs are being applied to one industry versus another.
Additionally, Still, it shows that the end users of ducts with their chips in them aren't slowing down purchases.
A second critical factor is Taiwan Semiconductor's unique position within the chip industry, in this volatile climate.
Conversely, There aren't many choices when it comes to chip foundries with high-end nology, given current economic conditions.
Intel (NASDAQ: INTC) has failed to launch many of the cutting-edge chip nodes, and low chip yields have plagued Samsung.
This analysis suggests that leaves TSMC at the top of the high-end semiconductor fabrication pyramid, making it a critical partner for giants Nvidia (NASDAQ: NVDA) and Apple (NASDAQ: AAPL).
As a result, these companies are somewhat compelled to deal with the tariffs rather than seeking an alternative, in this volatile climate. But this is only temporary.
TSMC is working to avoid tariffs by accelerating the build-out of its U, amid market uncertainty. Additionally, Chip duction facilities in Arizona. Nevertheless, This will allow U.
Clients to avoid any tariffs on foreign goods.
While Taiwan Semiconductor may not be experiencing any effects from tariffs, investors need to be cautious drawing conclusions from its experience to the broader market.
It's in a unique position that essentially requires its clients to deal with any tariff levies that come up, but it's actively working on increasing U.
Nevertheless, Chip duction capabilities to sidestep any tariffs.
Additionally, With TSMC's strong position, the company also becomes an intriguing stock to consider, as few companies hold a more powerful position than TSMC (remarkable data).
On the other hand, Taiwan Semiconductor looks an excellent buy at these prices Taiwan Semiconductor's bull case is fairly straightforward: Its clients will use more chips and increasingly advanced chips over the next few years.
This seems a no-brainer investment thesis, and management's bold five-year growth jections back it up.
At the same time, Starting with 2025, management jects that AI-related revenue will grow at a 45% compound annual growth rate (CAGR) over the next five years, with total revenue increasing at nearly a 20% CAGR.
That's easily market-beating growth, yet Taiwan Semiconductor's stock trades at nearly a market-average forward price-to-earnings (P/E) ratio (this bears monitoring).
TSM PE Ratio (Forward) data by YCharts Taiwan Semiconductor's 24 times forward earnings is nearly identical to the S&P 500's (^GSPC 0. 8 times forward earnings.
However, with market-beating growth expected, this makes the price well worth paying, and I think Taiwan Semiconductor's stock looks a great buy right now due to its jected growth, reasonable price, and strong position in the chip fabrication industry (noteworthy indeed).