Taiwan Semiconductor Manufacturing

NYSE · Semiconductor Foundry

Role

The Manufacturer

"The World's Most Critical Factory"

If CDNS and SNPS are the architects who design the blueprints, TSMC is the only construction company capable of actually building the skyscraper.

Investment Thesis

TSMC is the irreplaceable manufacturer of the world's most advanced chips. It holds 71%+ of the global foundry market and a near-monopoly on sub-5nm production — the nodes required for AI GPUs, Apple silicon, and next-gen data center chips. Every major AI chip — NVDA's Blackwell, Apple's A-series, AMD's MI300 — is manufactured exclusively by TSMC. With AI chip revenue growing at a projected 60% CAGR through 2029, TSMC is arguably the single most critical chokepoint in the entire AI supply chain.

The Analogy

The world's only factory capable of building a skyscraper. The architects (CDNS/SNPS) draw the plans, NVIDIA designs the tower — but TSMC is the one who actually builds it, and no one else can.

Key Metrics

Full Year Revenue

~$122BFY2025 (record)

Revenue Growth

+39%FY2025 YoY

Net Profit Margin

~46%Q4 2025

Q4 2025 EPS

$3.14+40.2% YoY

Q1 2026 Guidance

$34.6–35.8B+35% YoY

Foundry Market Share

71%+Advanced nodes

AI Chip Revenue CAGR

~60%2024–2029 projected

Advanced Node Share

74%of wafer revenue

Revenue History (USD Billions)

Competitive Advantages

+Near-monopoly on advanced nodes (3nm, 2nm) — no competitor is within 2–3 years of matching TSMC's manufacturing capability
+Every major AI chip is TSMC-exclusive: NVIDIA Blackwell, Apple A18, AMD MI300, Qualcomm Snapdragon
+Massive capital investment moat — TSMC spends $30–40B/year on capex, creating barriers that Intel and Samsung cannot match
+Arizona fab expansion underway, reducing geopolitical risk and qualifying for US CHIPS Act subsidies
+AI chip revenue growing at projected 60% CAGR through 2029 — secular tailwind with no near-term ceiling

Key Risks

−Geopolitical risk: Taiwan Strait tensions remain the single largest overhang — a conflict scenario would be catastrophic for global chip supply
−Customer concentration: NVIDIA, Apple, and AMD together represent a large share of revenue
−Intel and Samsung are attempting to close the technology gap, though both remain 2–3 years behind
−US-China trade restrictions could limit TSMC's ability to serve Chinese customers (currently ~12% of revenue)
−Massive capex requirements mean free cash flow is constrained during expansion cycles

Highest Conviction

Highest Conviction — the most critical chokepoint in the AI chip supply chain, with a near-monopoly position that is nearly impossible to replicate

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