Jim Cramer Breaks Down the Massive Increase in Capital Expenditures from Taiwan Semi

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the stocks Jim Cramer talked about, along with the memory shortage. Cramer explained how the company’s earnings and management commentary were “great news” for the semiconductor capital equipment makers. He said:

I think this industry has a lot more going for it. Two weeks ago, Taiwan Semi, the world’s largest semiconductor manufacturer, reported a total blowout quarter. More important, management said that the demand’s on fire. They plan to invest heavily in building out the production capacity. For this year, Taiwan Semi guided for 52 to $56 billion in capital expenditures. That’d be up 27 to 37% from last year. Wall Street was expecting less than 45 billion.

When management was asked if that would be enough to fix the chip shortages, their answer was a clear no. Taiwan Semi doesn’t see supply and demand coming into balance until 2028 or 2029. So they’re planning to keep their capital expenditures high for the next few years. Again, great news for the semiconductor capital equipment makers.

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) produces and sells integrated circuits and semiconductor devices. The company provides fabrication and other related services.

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Disclosure: None. This article is originally published at Insider Monkey.