TipRanks
5 min read
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Taiwan Semiconductor Manufacturing Company (TSM), or TSMC for short, the world’s numero uno pure-play semiconductor foundry, has surged nearly 20% over the past month. Despite this impressive rally, my outlook remains bullish.
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The company is well-positioned to benefit from powerful tailwinds, including relentless AI-driven demand, a dominant—nearly monopolistic—position in advanced chip manufacturing, ongoing geographic diversification, and a steady cadence of technological breakthroughs.
TSMC continues to be the principal manufacturer and primary supplier of chips for leading AI powerhouses, including Nvidia (NVDA), Advanced Micro Devices (AMD), Apple (AAPL), and Qualcomm (QCOM). Notably, TSM is also the producer of Nvidia’s cutting-edge Blackwell chip series, which has recently gained immense popularity.
TSMC’s 3nm process currently represents the most advanced semiconductor technology in the industry, delivering superior power efficiency and performance. Looking ahead, anticipation is building around the company’s upcoming 2nm and 1.6nm nodes, scheduled for launch in late 2025 and 2026, respectively.
The 2nm technology, referred to as N2, remains on track for volume production in the second half of 2025. This next-generation process is expected to deliver a 10–15% improvement in processing speed at the same power consumption, or a 20–30% reduction in power usage at equivalent performance. Following that, the 1.6nm process is projected to further improve power efficiency by an additional 15–20% over the 2nm node.
These advancements are especially timely, as data centers grapple with rising energy costs. The shift to more power-efficient chips is becoming not only a technological imperative but also an economic necessity. This positions TSMC as a key enabler in the ongoing global semiconductor upgrade cycle.
Reflecting this momentum, TSMC has outlined strong long-term growth expectations. The company projects its AI-related chip revenue to grow at a compound annual growth rate (CAGR) of 45% over the next five years, while overall revenue is forecast to grow at a 20% CAGR during the same period. These figures underscore the company’s pivotal role in powering the future of computing.
Such growth potential hasn’t gone unnoticed. Famous investor Cathie Wood’s Ark funds recently purchased 241,047 shares of Taiwan Semiconductor, worth $46.3 million, signaling firm institutional conviction.
