The silent giant behind virtually every advanced chip powering AI, smartphones, and modern infrastructure.

1. The Foundry King: The Core of Modern Tech

• TSMC invented the dedicated foundry model in 1987 and today commands ~50% global market share, manufacturing chips for clients like Apple, Nvidia, AMD, Qualcomm, and others .
• Widely recognized as the industry bellwether, TSMC builds the most advanced semiconductors—on nodes like 3 nm, 5 nm, and forecasting mass production of 2 nm in late 2025. 

2. Financial Muscle: AI Demand Supercharges Growth

• In Q2 FY2025, revenue hit US $30 B (+38.6% YoY), net income soared +60.7% to NT$398 billion (~US $12.8 B), gross margin ~58.6%, and operating margin ~49.6%  .
• Q1 2025 revenue also climbed 41.6% YoY to NT$839 billion (~US $25.5 B), with earnings per ADR rising over 60% YoY to NT$13.94 (~US $2.12)  .
• High margins—with gross margin 55–58% and net near 40%—reflect unparalleled efficiency in chip production.

3. AI & HPC: TSMC Is the AI Supply Backbone

• Approximately 60%+ of sales now come from high-performance computing (HPC) and AI-related chips, making TSMC the core engine of the AI era.
• Its customers remain hyperscalers like Nvidia, Apple, Amazon, and Microsoft—all reliant on TSMC for advanced process hubs.

4. Expansion Strategy & Geographic Diversification

• TSMC plans the largest expansion in its history, building at least 15 new fabs—including R&D and massive wafer plants—in Taiwan, the U.S., Japan, and Germany; capex in 2025 projected at US $38–42 B.
• The company is investing US $100+ B in U.S. facilities, partly in response to trade and tariff risk, but Taiwan remains the core R&D heart—the “silicon shield” . 

 5. A Strategic Pillar: Stability, Discipline, Sustainability

• TSMC is credit-rated AA‑ / Aa3—the strongest in its industry—and relies almost entirely on internal financing rather than relying on debt.
• It maintains sustainable dividends (never cut since inception), has disciplined M&A, and high return on equity (>25%) through the cycle.
• ESG credentials: rated AAA low-risk by Sustainalytics, included in FTSE4Good, ISS ESG “Prime,” and listed on the Clean 200 Index for Taiwan.

6. Key Risks to Watch

• Geopolitical exposure: U.S.–China trade friction could spark tariffs—recent warnings of up to 100% duty unless production shifts to U.S.—though Taiwan retains advanced tech control.
• Currency and margin pressure: NT dollar strength and overseas fab inefficiencies may trim margins slightly in future quarters.
• Customer concentration: Top clients make up a large portion of revenue—a risk if any hyperscaler reduces orders or builds in-house fabs.

 Investment Thesis Summary

TSMC is the central pillar of the global semiconductor ecosystem, powering the AI revolution with unmatched scale, cutting-edge process technology, and disciplined execution. With record profits, dominant client base, and massive expansion underway—both in Taiwan and abroad—it stands as a low-risk way to own the AI infrastructure wave. Although geopolitical and trade risks loom, its moat, margins, and market position offer a rare combination of growth, profitability, and stability.