War for Semiconductor Supremacy Rages On: Which Company Will Come Out on Top?

2023.06.01 10:52

• Escalating U.S.-China trade war is focused on the semiconductor industry
• Both countries are looking to ramp up investments in mass production of semiconductors
• Amid the geopolitical standoff, one of these three companies could come out on top

Last year was defined by a growing trade war between the United States and China centered around semiconductors. These tiny but crucial components, often referred to as the “oil of the 21st century,” play a vital role in producing electronic devices that have become an integral part of our daily lives, ranging from simple calculators to powerful computers.

With the rise of artificial intelligence, the demand for integrated circuits, chips, and advanced electronics is expected to skyrocket. This trend has caught the attention of governments worldwide, as they recognize the strategic importance of these technologies.

So, how will companies leading the global semiconductor production fare in the race to mass-produce semiconductors?

Using InvestingPro tools, Let’s analyze which companies can be considered for your portfolio as the trade war unfolds.

You can do so for virtually any stock by clicking on the following link: Start picking stocks today!

Taiwan Semiconductor Manufacturing

One of the basic metrics in chip manufacturing is nanometers-in simple terms, the smaller, the better. Taiwan Semiconductor Manufacturing (NYSE:) is the world’s leading manufacturer of 5-nanometer chips, but it also produces 3-nanometer, 4-nanometer, and will soon produce 2-nanometer chips.

The company employs more than 50,000 people and produces more than 10 million semiconductor products annually. Although the first quarter of this year was slightly weaker than the previous quarter (typical for the company over the past few years), revenue and net profits have remained stable.

TSMC Revenue Trend

Source: InvestingPro

InvestingPro includes a profile summary that lists the fundamental characteristics of a company. For TSMC, the positive characteristics outweigh the negative ones.

TSM Company Profile

Source: InvestingPro

Geopolitical risk poses a significant threat to TSMC’s business, particularly due to potential Chinese aggression. The United States has taken a firm stance in defending the island, creating a potential flashpoint for future conflict.

This situation adds uncertainty and challenges to the company’s operations and growth prospects.

Samsung Electronics