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Apple Vs Samsung, the Winner is TSMC

AAPL, SSNLF, TSM, NOK, QCOM, NVDA, INTC

No matter if a consumer buys an Apple Inc. NASDAQ: AAPL iPhone, a Samsung Electronics Co. Galaxy PINK:SSNLF or a ZTE Corp. (SZ:000063) Grand, Taiwan Semiconductor Manufacturing Co. NYSE:TSM, TW:2330)

TSMC gets $7 in sales for every SmartPhone sold worldwide, according to CEO Morris Chang, because it is the only company with the technology to make the chips used in the latest handsets.

That ubiquity let Taiwan-based TSMC post the best risk-adjusted returns among the world’s top 20 chipmakers over the past 3 yrs, according to the riskless return index. It also beat Apple, Samsung, Nokia Oyj NYSE:NOK and ZTE, the biggest SmartPhone makers.

Shares of the world’s largest contract maker of chips doubled in Taipei over the period and had the lowest volatility as the company was unaffected by market share swings between SmartPhone makers that sold 722-M units last year.

TSM’s size and financial strength means it can maintain a technology lead of at least 12 months over rival outsource United Microelectronics Corp. (TW:2303).

“As long as smartphones are growing, TSM wins. TSM is the most dominant supplier across all products.

TSM makes chips designed by clients including Nvidia Corp. (NASDAQ:NVDA), Qualcomm Inc. (NASDAQ:QCOM), Texas Instruments Inc. and Broadcom Corp. (BRCM).

The components it produces include ones that let Apple iPhones and Samsung Galaxy devices control touch-screen displays and communicate with mobile networks.

The company’s hold also extends to tablet computers. It gets about $11 from each one sold worldwide, according to CFO Lora Ho. Global SmartPhone sales will probably rise 22% this year, with tablets climbing 41% to 172-M units, according to forecasts..

TSM’s Taipei-listed shares returned 4.7% when adjusting for volatility in the three years ended 25 February.

That’s ahead of California based Apple, which posted an adjusted return of 4.2% and Samsung’s 3.7%. Qualcomm, the 2nd best performing dedicated chipmaker, rose 3% on an adjusted basis.

Intel Corp. (NASDAQ:INTC), the world’s biggest chipmaker, had a 0.3% return, it missed out on the growth in mobile devices.

Risk-adjusted return is calculated by dividing total return by volatility, or the degree of daily price variation, giving a measure of income per unit of risk. The returns are not annualized. Higher volatility means the price of an asset can swing dramatically in a short period, increasing the potential for unexpected losses.

LTNs Analysis for TSM: Overall Short Intermediate Long
Neutral (0.12) Neutral (-0.00) Neutral (0.12) Bullish (0.25)