TSM

Overview

Global Foundry Leader: Taiwan Semiconductor Manufacturing Company (TSMC) is the world’s largest semiconductor foundry, serving tech giants like Apple, Nvidia, AMD, Google, and Microsoft. Its market dominance and technological edge form an unmatched competitive moat.

Technology Leadership: TSMC produced over 11,878 distinct products using 288 different process technologies in 2024, with an annual capacity exceeding 16 million 12-inch equivalent wafers. Strategic goals for 2024–2029 include:

• Revenue CAGR: ≥ 20%

• Gross margin: ≥ 53%

• ROE: ≥ 25%

Q2 Performance

Strong Earnings Beat: Q2 2025 EPS was $2.47, beating estimates of $2.13; revenue reached $30.07B, up 44.4% YoY.

Upgraded Guidance: Full-year revenue growth revised up to around 30% (previously mid-20% range).

AI as Growth Engine: Needham projects revenue rising from $87.9B (2024) to $160B (2027), with AI chip revenue climbing from $26B (2025) to $46B (2027).

Key Growth Drivers 

AI Demand Surge: TSMC is a critical supplier for AI accelerators, GPUs, and advanced nodes powering data centers.

High Entry Barriers: Advanced process technology (3nm, moving toward 2nm) ensures technological leadership.

Financial Strength: High gross margins, strong cash flows, low debt ratio, and AA-/Aa3 credit ratings.

Risk Factors 

Geopolitical Risk: TSMC’s location in Taiwan presents potential vulnerability to regional tensions.

IP Theft and Security Concerns: In August 2025, reports emerged of internal data leakage regarding 2nm processes.

Regulatory and Trade Policies: While tariffs currently have limited effect on TSM, policy shifts could impact costs.