News about TSMC

The report values 3D integrated circuits at $16.8bn in 2024, with the memory segment projected to reach $22.2bn by 2030 as data centres need denser, more energy-efficient chips. Growth is driven by cloud computing, data centres, AI and machine learning, along with demand for miniaturised consumer devices and heterogeneous integration. The memory segment is forecast to grow at a CAGR of 19.2% and LEDs at 18.2%. The US market was about $4.6bn in 2024, while China is forecast to grow at a CAGR of 16.6% to roughly $6.7bn by 2030. The analysis also covers tariff risks, supply chain shifts and 26 companies, and names TSMC, NVIDIA, Micron and Amkor among those in the competitive race.

TSMC reported a strong third quarter driven by AI chip demand, with revenue up 51% in New Taiwan dollars and 41% in US dollars, and profit up 69% year over year. The stock still fell during the trading day after earnings, which the author attributes more to the broader market outlook than to the results. CEO C.C. Wei said demand is very robust with no sign of slowdown, and that the earlier guidance of a 50% CAGR for AI-related chip revenue from 2024 to 2029 may be too low. The author notes the stock trades at 18 times next year's earnings and 27 times trailing earnings; if TSMC meets 2027 expectations and the valuation holds at 27 times, that math implies a 50% rise, though the author stresses this is only arithmetic and not a certainty.

Broadcom (AVGO), with a market value of US$1.6 trillion, is competing with other AI chip clients such as Nvidia and Apple for capacity at TSMC, which is expanding its advanced manufacturing and reporting record profits in 2026. The article argues that access to TSMC's leading-edge lines is key for Broadcom to keep its edge in custom XPU and networking chips while scaling its VMware-based Private AI Cloud. The bullish case is that securing long-term wafer supply would strengthen the outlook for multi-year demand for AI XPU and Ethernet products. The bearish side is that TSMC acts as a chokepoint for Broadcom's lowest-margin, most capital-intensive products, so any allocation shortfall or pricing shift could pressure gross margins.

The article argues Micron is the better AI chip stock compared with Taiwan Semiconductor Manufacturing, even though both are among the largest chip foundries by market cap. Micron makes memory chips with commodity-like pricing, while TSMC makes logic chips designed by companies such as Nvidia and AMD. Memory demand has outpaced supply and pushed prices sharply higher, and the shortage is expected to worsen in 2027 and 2028. Micron also has faster revenue growth and trades at 5.3 times forward earnings versus 24 for TSMC, a gap the author attributes to market doubts that the current memory demand wave will last. The author calls this valuation mismatch too large to ignore, while still considering TSMC a fantastic investment.

TSMC plans to spend $60 billion to $64 billion this year on factories and equipment, about a third of trailing-12-month revenue, which the article presents as a sign of coming growth. CFO Wendell Huang linked the spending to long-term customer demand, including agentic AI, and said spending from 2026 through 2028 should be significantly higher than in the previous three years. Third-quarter revenue reached a record $46.7 billion, up 41% year over year, with fourth-quarter guidance of $52.3 billion to $54.3 billion, and profit margin rose to 51.1% from 45.7%. The article notes geopolitical risks in Asia and says overseas plants such as Arizona cost more to run and may weigh on future margins. The stock trades at 19 times 2027 earnings estimates, with consensus calling for 28% earnings growth next year.

TSMC (TSM) shares rose 13.14% over the six months to October 15, following a record quarter in which revenue grew 41.2% to $46.7 billion and net income jumped 68.7%, mainly on AI-related chips. The company guides next-quarter revenue to $52.3–54.3 billion and full-year revenue growth of about 44%, with demand also coming from CPUs for AI servers and networking chips. Capex is planned at $60–64 billion for 2026 plus $100 billion for US expansion, while gross margin slipped from 67.7% to 66.4% during the 2nm ramp. The article warns that if customers cut AI spending before new fabs reach full production, both earnings estimates and valuation could come under pressure.

TSMC (TSM) closed at $422.25 on October 15 and has returned 16.21% over six months. The latest quarter was the strongest in the company's history, with revenue of $46.72 billion above management's earlier guidance and net profit up 68.7%, faster than revenue. Gross margin reached 66.4% while the company started mass production on its newest 2nm process, a stage that typically weighs on margins. The risks are a concentrated customer base, spending plans set more than a year ahead, and advanced plants located in Taiwan, whose political status is disputed. The shares trade at 21.41x expected earnings for next year versus 33.67x reported earnings.

TSMC's third-quarter revenue rose 41% year over year to $46.7 billion, with high-performance computing, which includes AI data center chips, making up 68% of sales. Management expects fourth-quarter revenue of $52.3 billion to $54.3 billion, about 58% year-over-year growth at the midpoint. CEO C.C. Wei said AI chip demand is still far above TSMC's supply capacity and that AI accelerator sales, forecast to grow at a mid- to high-50s percentage rate annually through 2029, will probably be higher, though TSMC is planning cautiously for 2027 and rising component prices could pressure its smartphone business, which accounted for 21% of third-quarter revenue. The stock, up about 39% year to date as of Oct. 15, 2026, trades at roughly 19 times analysts' 2027 earnings estimates, while Wall Street expects earnings to grow 38% annually over the next several years.