TSMC( $Taiwan Semiconductor Manufacturing(TSM)$ ) just delivered a jaw-dropping Q1 net profit of NT$361.6 billion ($10.99 billion), smashing market estimates of NT$354.644 billion and signaling a potential semiconductor resurgence. Meanwhile, ASML’s latest quarter painted a gloomier picture, with orders falling short of expectations due to a sluggish chip market and looming U.S. tariff threats. As these two titans navigate choppy waters, investors are left wondering: How will tariffs shake up their businesses? Can semiconductor margins weather the storm? And is TSMC’s rebound a golden opportunity—or a risky gamble? Let’s unpack it all.
Tariffs: A Storm Brewing for TSMC and ASML $ASML Holding NV(ASML)$
TSMC’s Tariff Outlook TSMC’s leadership isn’t sweating tariffs just yet. The company’s CFO noted no shifts in customer behavior so far, despite U.S.-China trade tensions. With North America driving 77% of its revenue (up from a smaller share last year) and China slipping to just 7%, TSMC’s exposure to tariff fallout seems manageable. Its $100 billion U.S. expansion—building cutting-edge fabs in Arizona—could face higher costs if tariffs jack up equipment or material prices. But here’s the kicker: TSMC’s near-monopoly on advanced chips (like 3nm and 5nm) gives it leverage to pass those costs onto customers. For now, the company’s sticking to its 2025 revenue growth forecast of mid-20%, showing cautious optimism.
ASML’s Tariff Troubles ASML’s outlook is less rosy. The Dutch equipment maker’s net bookings hit €3.94 billion, missing the €4.89 billion analysts expected. Why? Chipmakers are holding back on big purchases, rattled by U.S. tariff threats and a national security probe into semiconductor imports. ASML’s machines—vital for producing chips at TSMC, Intel, and Samsung—could see demand wane if trade barriers disrupt capex plans. The CEO flagged “uncertainty” stretching into 2025 and 2026, and with TSMC slow to adopt ASML’s pricey new high-NA EUV tools, the tariff cloud could darken ASML’s growth path further.
The Bottom Line TSMC’s diversified revenue and pricing power make it more tariff-resistant, while ASML’s reliance on chipmaker spending leaves it exposed. If U.S. tariffs escalate, TSMC might shrug off the hit; ASML, not so much.
Semiconductor Margins: Who’s Holding Strong?
TSMC’s Margin Muscle TSMC’s Q1 gross margin clocked in at 58.8%, a slight dip from Q4 but a leap from last year’s 53%. Looking ahead, the company’s projecting 57-59% for Q2 and aims to keep long-term margins around 53%, even with overseas fab costs. How? Advanced nodes—3nm chips at 22% of revenue and 5nm at 36%—keep profitability humming, fueled by AI chip demand. TSMC’s scale and tech edge give it a buffer against rising costs, tariff-related or not.
ASML’s Margin Muddle ASML’s margins are trickier. Weak bookings and a shift to next-gen tech (those $350 million high-NA EUV machines) are already squeezing momentum. If tariffs hike component costs or delay orders, profitability could take a hit. That said, ASML’s lock on EUV lithography—irreplaceable for advanced chipmaking—offers some protection. Long-term AI demand should keep it afloat, but near-term pressure is real.
The Verdict TSMC’s margins look rock-solid, thanks to its tech dominance and customer demand. ASML’s could wobble if trade disruptions linger, but its niche keeps it in the game.
TSMC’s Rebound: Buy the Dip or Brace for Impact?
TSMC’s stock has slid 18% year-to-date, a steep drop for a company posting 35% revenue growth and a 60% profit surge. The Q1 beat, AI-driven momentum (high-performance computing is 59% of revenue), and a forward P/E of 22 (versus ASML’s 29) scream undervaluation. Wall Street’s buzzing—Morgan Stanley and JPMorgan see it climbing to $148-$153, with Citi eyeing $160 if trade tensions ease. The $100 billion U.S. push only sweetens the deal, cementing TSMC’s role in the global AI boom.
But tariffs could crash the party. Higher U.S. fab costs or a China revenue dip (small but still 7%) might dent sentiment. If trade talks sour, the stock could slip to $130. Still, TSMC’s fundamentals—massive growth, unbeatable tech, and a hefty cash pile—make it a standout. I’m bullish: this looks like a dip worth buying, assuming you can stomach the tariff rollercoaster.
TSMC’s Revenue Surge in Focus
This graph shows TSMC’s relentless climb—proof its growth isn’t slowing down.
Final Call: TSMC Shines, ASML Wavers
TSMC’s blockbuster earnings and AI tailwinds make it a semiconductor star, with tariffs as the main wildcard. ASML’s stuck in a tougher spot—soft orders and trade risks cloud its horizon. Margins? TSMC’s got the edge; ASML’s hanging on. I’m betting on TSMC’s rebound—it’s a value pick with upside, as long as trade chaos doesn’t derail it. What’s your move—riding TSMC’s wave or waiting out the storm? Let me know!
Disclaimer: Not investment advice. Markets can flip fast—play it smart.
📢 Like, repost, and follow for daily updates on market trends and stock insights.
📝 Disclaimer: This post is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.
📌@Daily_Discussion @Tiger_comments @TigerStars @TigerEvents @TigerWire
Comments