Gap widens between TSMC and Samsung Electronics

The gap between the world’s top two chip companies -- TSMC of Taiwan and Samsung Electronics of South Korea -- has widened over the past 12 months in terms of market cap, according to a Seoul-based corporate tracker.

CEO Score said on Sunday that the market capitalization of TSMC and Samsung Electronics had a difference of about $10 billion a year ago, but the gap has widened to $117 billion.

As of May 27, the value of TSMC was $543.3 billion, a 96.3 percent surge from $276.8 billion on-year, while that of Samsung was $425.4 billion, a 59.5 percent increase in the same period.

TSMC shares are traded on the Taiwan Exchange and the New York Stock Exchange, while Samsung stocks are quoted solely on the Korea Exchange. The CEO Score’s data did not provide the performances of the respective stock market’s benchmark indexes.

Though TSMC had to cut off computer chip sales to China’s Huawei under US sanctions last year, the world’s largest contract chipmaker hit a record annual revenue of $47.8 billion by winning new deals from Apple and Xiaomi based on its industry-leading foundry technologies.

TSMC is leading Samsung in terms of profitability and market share. In the first quarter, TSMC saw a revenue of $12.9 billion, which was actually smaller than Samsung’s 19 trillion won ($17.1 billion). However, TSMC was twice as profitable than Samsung, logging an operating profit of $5.3 billion, compared to Samsung’s 3.3 trillion won.

In the first quarter of 2019, TSMC and Samsung controlled 48.1 percent and 19.1 percent of the global foundry market. In the first quarter last year, TSMC’s presence grew to 56 percent, while Samsung’s shrank to 18 percent.

The leading foundry firm has laid out aggressive expansion plans, announcing a plan in March to build six chip manufacturing plants in Arizona. Industry watchers say that TSMC is now growing faster than a total chip company.

In contrast to TSMC, Samsung fell short of market expectations despite favorable market conditions due to series of negative factors -- the imprisonment of Samsung Electronics Vice Chairman Lee Jae-yong, the shutdown of its Austin, Texas plant and lackluster chip sales in the first quarter. As the result, the stock price of Samsung Electronics, which soared over 90,000 won earlier this year, failed to reach the 100,000-won mark, and is now traded at around 80,000 won.

TSMC’s growth rate is staggering considering that Samsung was bigger just two years ago. In November 2019, Samsung’s market capitalization stood at around 340 trillion won compared to TSMC’s 310 trillion won.

Samsung is currently being chased by a US fabless firm Nvidia, whose market capitalization soared 81.8 percent to $385.6 billion over the past 12 months.

By Kim Byung-wook (kbw@heraldcorp.com)