Taiwan Semiconductor Manufacturing Company (TSM) stock is in focus after the chipmaker reported earnings that beat expectations and reiterated its revenue forecast despite ongoing tariff concerns.

Moor Insights & Strategy founder, CEO, and chief analyst Patrick Moorhead takes a closer look at the earnings print and discusses his outlook for TMSC and its competitors, like Samsung (005930.KS) and Intel (INTC), on Morning Brief with Madison Mills and Brad Smith.

To watch more expert insights and analysis on the latest market action, check out more Morning Brief here.

Video Transcript

00:00 Reporter

And Taiwan Semiconductor Manufacturing Co. is projecting confidence in the face of tariff-driven pressure, leaving its full year growth outlook unchanged. The Taiwanese chipmaker had a robust first quarter topping analyst estimates with a 60% year-over-year net income increase. The report comes after new US export controls roiled Nvidia and the broader chip sector on Wednesday. Here we've got Patrick Morehead, Moor Insights and Strategy founder, CEO, and chief analyst. Patrick, always great to speak with you here. Talk to me about your big takeaways from this TSMC print given the fact that it's being seen as such a bellwether in an industry for tech that took a huge hit in markets on Wednesday.

01:06 Patrick Moorhead

Yeah, zero surprises for me. I mean, essentially, this is all dependent on this Mag 7 CapEx build out. And it's not that Apple isn't relevant in this scenario, but Apple got a reprieve on the, on the tariff situation. So that's looking pretty good. TSMC, while they didn't use the word sold out, they are essentially sold out for 2025 leading edge wafers. And regardless of the ebbs and the flows right now, this continues. But, you know, all bets are off if we see big, uh, big tariffs and semiconductors, or, uh, reinstitution of the smartphone and PC tariffs that were, uh, that, that went away last week.

02:33 Reporter

Patrick, I, I was running some charts this morning just looking at the gross margins that have become a little bit normalized and steadily grown for TSMC. And, and that's even with the introduction and increasing talk and investments around some potential competitors in the future, but it really kind of solidifies how much they are the de facto type of play here, even with potential competition in the future. Are these margins attainable over a longer term period of time? We're talking levels between and the mid kind of 55 percentage. I think the averages are about 57% gross margin for this company. Is that something that's able to be replicated even with the entrance of new competition in the space?

03:40 Patrick Moorhead

Yes. So TSMC margins are obscene or obscenely awesome depending on which lens that you want to look at. And there's talks of a 30% price increase in, in the US. And right now they're, they're essentially they're, they're testing their ability to raise prices. And what TSMC will say is that we need this money to go in and do some massive CapEx, but with profits raising and CapEx raising at the same time, it doesn't look like this. I think this opens the door for companies like Intel, for companies like Samsung to take some high-end market share away from TSMC. I would put a hundred percent chance that on a percentage basis, TSMC loses market share. All it takes is Intel or, or Samsung to get one major customer and this will happen.

05:11 Reporter

Just very quickly, Patrick, a follow-up regarding TSMC amid the Trump administration. What is the potential headwind that this company could be facing because they've already been threatened with more tariffs, or taxes rather, if they don't produce in the US?

05:48 Patrick Moorhead

So I, I think you nailed it right there. I mean, the biggest headwind they have is, is a threat of tariffs. The second would be if the US economy or the global economy goes into a recession, and that puts pressure on the Mag 7 CapEx, which then reduces the amount of those high-end GPUs and high-end CPUs and accelerators that are driving this economy today.

06:39 Reporter

Super quick, Patrick, to what extent do you foresee TSMC's results this morning impacting Apple moving forward?

06:52 Patrick Moorhead

So I don't think it impacts Apple at all at this point. Again, TSMC's forecasts were based on no huge changes in Apple business. That could change with a tweet. It could change with an executive order on any changes to not only semiconductor tariffs, but also devices that come out of China that would dramatically and very negatively impact Apple.  Related Videos

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