The Motley Idiot Did a Deep Dive Into TSMC’s Income by Know-how, Platform, and Geography. Here is What It Discovered.

• Taiwan Semiconductor Manufacturing Firm makes 60% of its gross sales by manufacturing among the most superior semiconductors in the marketplace.

• The corporate has an estimated 90% of the superior processor market, and greater than half of its income comes from the high-performance computing area.

• TSMC sells principally to North American tech firms, they usually may spend trillions of {dollars} by 2030 to construct out new AI information facilities.

• 10 shares we like higher than Taiwan Semiconductor Manufacturing ›

Taiwan Semiconductor Manufacturing Firm (NYSE: TSM), also called TSMC, is among the premier producers of superior processors, lots of that are used for synthetic intelligence. The corporate’s robust place on this area and its progress over the previous few years have resulted in its inventory worth hovering almost 200% over the previous three years.

Current analysis from The Motley Idiot sheds some mild on how TSMC’s manufacturing know-how is a step forward, the way it makes nearly all of its income, and the place most of its clients are situated. Importantly, all of those elements work collectively to set TSMC aside from the competitors and make its inventory a wise one to personal for years to return.

TSMC manufactures among the world’s most superior processors, and the breakdown of the corporate’s income exhibits simply how a lot comes from its totally different manufacturing capabilities. Chip firms use the time period chip node to explain what number of transistors will match onto a semiconductor, with the unit of chip measurement being nanometers (nm). Typically talking, the smaller, the extra superior the processor.

Here is a snapshot of Taiwan Semiconductor’s prime 5 income mills, by chip dimension:

Knowledge supply: Taiwan Semiconductor.

This income composition is vital to spotlight as a result of it exhibits {that a} whopping 60% of the corporate’s semiconductor gross sales are from the smallest and most superior processors (3nm and 5nm) in the marketplace.

No different firm compares to TSMC’s manufacturing prowess, and it is prone to proceed outpacing the competitors. TSMC has already signal 15 offers with tech firms for 2nm semiconductor manufacturing, leaving rivals, together with Samsung, far behind.

Simply as vital because the know-how behind TSMC’s income is what applied sciences these processors energy. If we return 5 years, smartphones have been the driving income power for TSMC. Now, it is high-performance computing (suppose AI information facilities).

The corporate has dominated the manufacturing of superior processors so properly, in reality, that TSMC makes an estimated 90% of the world’s most superior processors.

Right here is the corporate’s income distribution over the previous 4 quarters:

Knowledge supply: Taiwan Semiconductor.

TSMC’s making nearly all of its income from high-performance computing is vital as a result of it exhibits that the corporate efficiently tailored with the occasions, transferring from its beforehand dominant smartphone phase to gross sales from chips to AI information facilities.

Extra progress could possibly be on the best way, too, contemplating that semiconductor chief Nvidia believes know-how firms may spend as much as $4 trillion on AI information heart infrastructure over the subsequent 5 years.

Taiwan Semiconductor relies in, you guessed it, Taiwan, however the overwhelming majority of its gross sales come from promoting processors to North American firms. About 5 years in the past, North America accounted for simply over half of TSMC’s gross sales, however that is jumped to 75% presently. China and the Asia-Pacific area tie for second place with simply 9% every.

Why does this matter? A few of the most superior synthetic intelligence firms, together with Nvidia, OpenAI, Microsoft, Meta, and Alphabet, are primarily based in North America. Taiwan Semiconductor’s shift towards gross sales on this geographic space is a mirrored image of the corporate efficiently attracting the world’s main AI firms to have their chips made by TSMC.

With TSMC making an estimated 90% of the world’s most superior processors, the corporate outpacing its manufacturing competitors, and synthetic intelligence firms poised to spend trillions of {dollars} to construct out and improve information facilities, TSMC is properly positioned to be an ideal AI inventory for years to return.

Simply needless to say the stellar beneficial properties TSMC inventory has skilled over the previous a number of years have been a results of the early AI increase, which implies future returns might not be fairly as spectacular.

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Chris Neiger has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Alphabet, Intel, Meta Platforms, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Idiot recommends the next choices: lengthy January 2026 $395 calls on Microsoft, quick January 2026 $405 calls on Microsoft, and quick November 2025 $21 places on Intel. The Motley Idiot has a disclosure coverage.

The Motley Idiot Did a Deep Dive Into TSMC’s Income by Know-how, Platform, and Geography. Here is What It Discovered. was initially revealed by The Motley Idiot