TSMC founder warns of global impact due to U.S. chip export restrictions

Morris Chang, the founder of Taiwan Semiconductor Manufacturing Co (NYSE:TSM), expressed concerns over the potential global repercussions of U.S. export restrictions on the semiconductor industry. His comments were made during an Asia Society event on Friday.

Chang drew attention to the escalating tech war between the U.S. and China, specifically focusing on its possible fallout on the interconnected global semiconductor supply chain. He suggested that the recent U.S. export restrictions, which came into effect after Huawei Technologies launched a new domestically produced chip, could isolate China’s chip industry. This could potentially impact not just China but all global players due to market interdependence.

The TSMC founder further highlighted the confrontation between these nations, characterizing it as an established power versus an emerging one, a situation that he noted often escalates into serious confrontations.

According to InvestingPro data, TSMC is a prominent player in the Semiconductors & Semiconductor Equipment industry with an adjusted market cap of $424.66 billion and a P/E Ratio of 15.37. The company has been profitable over the last 12 months and analysts predict the company will continue to be profitable this year. The company’s revenue for LTM2023.Q3 stands at $66.9 billion with a gross profit of $3.8 billion, indicating impressive gross profit margins.

Chang also mentioned that the immediate aim of these export restrictions was to slow China’s growth in this sector. He warned that such decoupling could cause an industry-wide impediment. Drawing parallels with historical economic conflicts that escalated into warfare, he suggested that the current situation could follow a similar trajectory if not carefully managed.

Despite the challenges posed by this decoupling, Chang expressed hope that it wouldn’t lead to a more serious conflict. He noted that the effects of this decoupling are already visible within the industry.

InvestingPro Tips suggest that TSMC operates with a high return on assets, which stood at 20.34% for LTM2023.Q3. The company has also consistently increased its earnings per share and raised its dividend for 3 consecutive years, with the dividend yield for Y2023.D300 at 1.71%. For more insights like these, readers can visit InvestingPro which offers 21 additional tips for TSMC.

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