TSMC is Asia’s most valuable company now – What does the future hold?

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Asia’s crown for the most valuable companies goes to the Taiwan Semiconductor Manufacturing Co., Ltd (TAI:2330) thanks to the strong demand for semiconductors globally.

With a slightly above $600 billion market cap, TSMC dislodged Chinese Tencent to claim the top spot. TSMC’s record net income of $6 billion from a revenue of $15.74 billion in the fourth quarter of 2021 also summarized a strong year.

CC Wei, TSMC’s CEO, is still optimistic about 2022, saying that the silicon content is rising even though end-market demand could ease in terms of units. For this matter, the market will be less volatile for the company.

To emphasize the strong belief in the company’s prospects, TSMC allocated $44 billion of capital expenditures in 2022 to boost chip production, up by $10 billion from the prior year.

The company also said its revenue in the first quarter of 2022 could rise to between $16.6 billion and $17.2 billion. TSMC stock surged afterwards before pairing gains.

TSMC correcting after tapping a high of $687 

Source – TradingView

On the daily chart, TSMC is taking a breather and is approaching the consolidation zone between $589 to $623. However, it is still on a bullish trend after clearing the level at $623.

Although the stock price may touch the bottom at $589, which is the established support, it may also rebound at the upper zone of the consolidation at $623. The 50-day and 100-day provide support below.

A potential rebound may occur when the price meets the 50-day moving average close to or at the $623 level where the stock started the bullish takeoff.

Concluding thoughts

Chip demand is not going away soon, with the application growing for components in the emerging electric vehicle industry and consumer products, including smartphones. As long as TSMC continues to become the go-to chip maker, the only way for its stock is up.

Thus, the recent correction opens up an opportunity for a buy, with entries at $623 or below it at $589.

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