A Gem of Taiwan…and Tech

Focus: GLOBAL

Yiannis Mostrous Image Yiannis Mostrous Editor, The Capitalist Times

Two Taiwanese chip companies produce a majority of the chips that go into the world’s electronic devices, and one of those is a good buy now, writes Yiannis Mostrous of Global Investment Strategist.

Taiwan Semiconductor Manufacturing (TSM) is the world’s largest semiconductor foundry, with a stable of high-profile clients including Qualcomm (QCOM), Nvidia Corp (NVDA) and Advanced Micro Devices (AMD).

Taiwan Semiconductor Manufacturing will report earnings this week, though the announcement is unlikely to move the stock. The company has already reported third-quarter sales of $3.52 billion, and the market has anticipated decent earnings for the company, though nothing more.

Investors should look to the fourth quarter and the first half of 2012 for developments that will take the company’s stock price decisively higher.

Investors and corporate executives remain worried about macroeconomic uncertainty; they’re likely to adopt a wait-and-see attitude when it comes to making big new orders. As a result, semiconductor inventories should decrease, but they won’t be restocked quickly until decision makers have a clearer sense of the economy’s direction.

In this environment, if Taiwan Semiconductor Manufacturing can tread water—even with a small decline in revenue—the company’s stock will be in a good position to outperform.

Taiwan’s exports grew 9.9% year-over-year in September, up slightly from 7.2% yearly growth reported in August.