thoughts from themes
Semiconductors are the unsung heroes of the modern world. Found in everything from smartphones to washing machines, they are essentially the “brains” of the electronic devices we have come to depend on. Ultimately, it is chip technology that has enabled the digital revolution we have experienced over the last few decades. Without this technology, we would not have the seamless connectivity that underpins the global economy today.
Looking ahead, the semiconductor industry is expected to get significantly bigger as the world becomes more digital and fields like artificial intelligence (AI), cloud computing, and medical technology advance. According to PWC1, the global semiconductor industry could be worth $1 trillion by 2030, roughly two thirds larger than its size in 2021. One company that appears well positioned to benefit from this industry growth is Taiwan Semiconductor Manufacturing Company or “TSMC” for short. The world’s largest2 chip manufacturer, it’s a critical player in the industry.
A Chip Powerhouse
TSMC is a Taiwanese multinational semiconductor manufacturer that is listed in both Taiwan and the US. It was founded in 1987 by Morris Chang, who revolutionized the industry by creating a pure-play foundry business focused solely on manufacturing chips for other companies.
Today, TSMC manufactures products for just about every chip designer out there – including Nvidia, AMD, Apple, Samsung, Qualcomm, and Broadcom – producing over 60% of the world’s semiconductors (and over 90% of the most advanced ones). So, it plays a pivotal role in the tech ecosystem.
Known for its state-of-the-art manufacturing processes, the company has consistently been at the forefront of advances in semiconductor manufacturing technology over the years, successfully manufacturing 7nm, 5nm, and now 3nm chips. The majority of its chips are manufactured in Taiwan; however, it also has manufacturing facilities in the US, Japan, Germany, and China.
Substantial Growth Over the Last Decade
As the world has become more digital over the last decade and demand for semiconductors has risen, TSMC’s revenues and earnings have increased significantly. For 2024, revenue amounted to NT$2,894 billion, an increase of 243% on the figure in 2015. Net income for 2024 amounted to NT$1,173 billion, up 282% on the figure in 2015.
Source: LSEG as of April 21, 2025
Source: LSEG as of April 21, 2025
Multiple Long-Term Growth Drivers
- Artificial Intelligence – AI requires a vast amount of computer processing. Semiconductors, particularly central processing units (CPUs) and graphics processing units (GPUs), provide the necessary processing power to handle computations efficiently.
- 5G Connectivity – The rollout of 5G networks globally is fueling demand for sophisticated chips. These chips are used in smartphones, network infrastructure, and Internet of Things (IoT) devices.
- Electric Vehicles (EVs) and Autonomous Vehicles – The automotive industry is undergoing a major transformation today as a result of the rise of EVs and self-driving technology. These technologies rely on advanced chips for various functions, including battery management, driver-assistance systems, and autonomous driving capabilities.
- Renewable Energy – Chips are used across the entire clean energy ecosystem. They can be found in solar panels, wind turbines, battery management systems, smart grids, and sensors and controls.
All of these technologies are heavily reliant on the advanced chips that TSMC manufactures. As these fields continue to expand and evolve, the company should be well-positioned to see sustained and increasing demand for its products.
US Manufacturing Capabilities
While the majority of TSMC’s chips are made in Taiwan today, the company has been expanding its manufacturing presence in the US recently in an effort to reduce geopolitical risk.
In May 2020, it announced plans to invest $12 billion to build an advanced semiconductor manufacturing plant in Arizona4. In then announced plans for a second plant in December 2022 and a third plant in April 2024.
More recently, in March this year, TSMC said it would increase its existing US investment by $100 billion5 and build three new fabrication plants, two advanced packaging facilities, and a major R&D team center on US soil. These plants are intended to produce advanced semiconductors including 5nm, 4nm, and 3nm chips.
2025 Guidance
Well-Positioned for Growth
In summary, TSMC stands at the heart of the global technology industry today. With its distinguished customer base and advanced chip manufacturing capabilities, it could potentially thrive as the world becomes increasingly reliant on advanced computing power.
Of course, geopolitical issues remain a risk. However, with the emergence of transformative technologies like AI, 5G, and autonomous driving – all of which are boosting demand for high-end chips – the company is well positioned for success in the long run.
1PWC, State of semiconductor industry, as of November 28, 2024
2JP Morgan, Eye on the Market, Outlook 2025
3Refinitiv Streetevents, Edited Transcript, Q4 2024 Taiwan Semiconductor Manufacturing Co Ltd Earnings Call, as of January 16, 2025
4TSMC Arizona, as of April 22, 2025
5TSMC, TSMC Intends to Expand Its Investment in the United States to US$165 Billion to Power the Future of AI, as of March 4, 2025
6TSMC, Quarterly Management Report, as of January 16, 2025
7TSMC, 2025 First Quarter Earnings Conference, as of April 17, 2025
