NYSE · Information Technology · Semiconductor Foundry
TSM Taiwan Semiconductor Manufacturing Company Limited (ADR)
As of 2026-05-20 · Hsinchu, Taiwan
Business summary
TSMC is the world's largest semiconductor foundry — it manufactures chips designed by others (NVIDIA, Apple, AMD, Broadcom, Qualcomm, MediaTek, and many more). At the leading edge (3nm and now 2nm), TSMC has effectively no peer; Samsung is generations behind and Intel is investing aggressively but not yet competitive at the volumes that matter. The 2026 capex raise to $52-56B reflects demand from AI customers (NVIDIA, AVGO/TPU, AMD) that exceeds prior expectations.
Beyond raw wafer fabrication, TSMC owns the most advanced packaging technology (CoWoS — Chip-on-Wafer-on-Substrate), which is required for HBM-attached AI accelerators like the H200 and B200. CoWoS capacity has been the binding constraint on NVIDIA shipments and remains a structural advantage. The risks are geopolitical (Taiwan-China tensions) and customer concentration (Apple + NVIDIA each >15% of revenue).
Connected theses
- T002 — The semi capex cycle is being underwritten by hyperscalers, not consumers — and equipment is the cleanest expression · core
Foundry duopoly winner. Captures spend regardless of which fabless designer wins.
Key metrics
| FY26 capex | $52-56B Up from $40B FY25. | 2026-Q1 guidance |
|---|---|---|
| Gross margin guidance | 63-65% Premium pricing on leading-edge nodes. | 2026 |
| CoWoS capacity | ~70k wafers/month (expanding) Most-constrained advanced packaging in the industry. | FY2025-26 |
Valuation snapshot
| Price | $395.95 |
|---|---|
| Market cap | $2,050B |
| Forward P/E | 24.0× |
| EV / EBITDA | 14.0× |
| FCF yield | 3.5% |
Cheaper than NVDA on every multiple, with arguably more defensible business. The discount is the Taiwan geopolitical premium. Investor calculus: how much discount is rational for the tail risk?
Evidence
- Capex raised to $52-56B; 8th consecutive quarter of growth; GM guide reinforces pricing power.
- Geographic diversification in motion — Arizona 4nm in production, Japan JASM operational, Germany 2027.
Catalysts
- Q2 results high
What to watch: AI revenue mix, 2nm timing, CoWoS expansion progress - FY27 capex outlook high
What to watch: Direction tells you semi cycle direction
Falsifiers
- China-Taiwan escalation triggering material operational disruption
armed · Geopolitical news + IAEA / Pentagon assessments - Capex guidance cut >15% in any quarter
armed · Quarterly results - Major customer (NVDA or AAPL) signals serious second-source effort
armed · Hyperscaler + Apple commentary - CoWoS competition (Samsung, Intel Foveros, ASE) catches up materially
armed · Advanced packaging vendor announcements
Agent notes
Hold. The right way to own the AI capex cycle without paying the NVDA multiple. Taiwan risk is real but priced in. Arizona + Japan + Germany expansions matter strategically even if they take years to scale.
Educational notes
📚 foundry vs fabless vs IDM
There are three semiconductor business models. (1) Foundry — like TSMC, manufactures chips designed by others. No designs of their own. (2) Fabless — like NVIDIA, AMD, Apple, Broadcom — designs chips but outsources manufacturing. (3) IDM (Integrated Device Manufacturer) — like Intel, Samsung — both designs and manufactures. The trend over 30 years has been toward foundry+fabless separation because the capex required to keep up at the leading edge is so enormous that only the largest IDMs survive. TSMC pulled away by specializing — they don't compete with their customers, so designers trust them with their IP. Samsung's challenge in foundry is partly that they also have a competing memory + design business.
Open questions
- Arizona Fab 21 yield ramp timing?
- How much of CoWoS expansion is sold out vs available?
- Apple 2nm volume timing for iPhone 18/19?