To this Fool, and at these prices, Taiwan Semiconductor (NYSE:TSM) is either a real value in the tech sector or seductive bull bait leading into a value trap. Unfortunately, there's no perfectly reliable way to know for sure right now.

Certainly, the first quarter was a good one for this leading manufacturer of other people's chips. Revenue rose 39% from last year and declined about 5% sequentially -- a smaller decline than had been expected. Margins were up on a year-over-year basis (down sequentially), and the company shipped over 2% more wafers than in the immediately preceding quarter.

Cash flow was also strong this quarter, but that's part of what makes me a little nervous. At these production levels, Taiwan Semiconductor is basically at capacity, and that's usually the point at which the company invests in more capacity -- which sucks up cash flow and ultimately leads to the cyclical nature of the business. Then again, maybe, just maybe, the industry has learned something from the past, and companies like Taiwan Semi, together with United Microelectronics (NYSE:UMC), Chartered Semiconductor (NASDAQ:CHRT), et al., can manage this cycle better.

Certainly, there are plenty of good companies that rely upon Taiwan Semi -- companies like Silicon Labs (NASDAQ:SLAB), Intersil (NASDAQ:ISIL), and others whom I expect to continue growing. And while the outsourcing trend is firmly in place, there's not a lot that Taiwan Semi can do to influence demand. If business is weak for its customers, business will be weak for Taiwan Semi.

Given that I'm still guardedly optimistic on the chip sector in general, my leanings on Taiwan Semi are positive -- particularly since I think these shares look cheap. By the same token, there's a lot of angst right now about where we are in the chip cycle, what it'll do in terms of capacity increases, how the competition will react, and so forth. And then there's also the chance that Philips (NYSE:PHG) may sell some or all of its rather large stake in the company. All the same, I think this one is still worth a look for value-oriented Fools looking to add a little tech to their portfolios.

For more Foolish thoughts on the semiconductor space:

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).