The Taiwan Semiconductor Manufacturing Company and Samsung Electronics have emerged as two key players in the increasingly competitive landscape of the chip-making sector. However, when it comes to capitalizing on the growing trend of artificial intelligence, TSMC seems to have an edge, according to Mehdi Hosseini, senior tech and hardware equity analyst at Susquehanna.
"Samsung has more exposure to the memory industry, which is more volatile, compared to TSMC that has more leverage to leading edge in semiconductor manufacturing," Hosseini said. "So, on a relative basis, I think TSMC offers better quality of earnings and also a much better free cash flow margin." "So, the quality of earnings, quality of management, and shareholder return favor TSMC over Samsung," Hosseini concluded.