TSMC's Recovery and Earnings Outlook Amid US-China Chip Spat and Undervaluation Concerns

Taiwan Semiconductor Manufacturing (TSMC) is set to report a 5% YoY fall in quarterly earnings due to a global semiconductor glut, but demand is expected to rebound later this year. However, TSMC's vulnerability to China's cybersecurity watchdog's review of Micron Technology's products and Beijing's retaliatory strategy against US chip sanctions could impact its recovery. TSMC's dominance in cutting-edge chips means that even if it can't sell to China, there are plenty of other buyers. But, if Chinese companies account for just 11% of TSMC’s top line, its other customers are far more exposed to the People's Republic.