tsmc's dominance in chipmaking: what it means for tech giants

2025-05-05 tsmc

Hsinchu, Monday, 5 May 2025.
Analysts predict tsmc will remain the leading chipmaker for the foreseeable future. This is due to its cutting-edge technology and advanced manufacturing. tsmc’s chips are crucial for major tech companies. The company’s revenue and earnings per share are expected to grow significantly between 2024 and 2027. The compound annual growth rate is projected at 21% and 22% respectively. tsmc is set to begin mass production of its 2nm chips in the second half of this year. This solidifies its position as a key player in the semiconductor industry and reinforces its importance to the tech world.

tsmc’s leading position

TSMC stands as the world’s foremost contract chipmaker, leveraging advanced technology to maintain its industry lead [1]. The company’s revenue is significantly driven by high-performance computing (HPC) and smartphone markets, accounting for 59% and 28% respectively [1]. TSMC’s technological prowess is evident in its smallest 5nm and 3nm nodes, which contributed to 58% of its revenue in the last quarter [1]. This commitment to innovation ensures TSMC’s continued dominance in the semiconductor landscape, crucial for tech giants relying on cutting-edge chip solutions [1].

analyst views on tsmc’s stock

Morgan Stanley has reaffirmed TSMC as a top pick, citing increased AI capital expenditure from companies like Meta and Microsoft [7]. Meta’s 2025 capital expenditure has increased by $7 billion, signaling strong demand for TSMC’s advanced semiconductor solutions [7]. TSMC’s stock closed at $179.28, a 3.80% increase, or $6.56 [7]. Despite a nearly 10% year-to-date drop, TSMC’s stock has gained 26.65% year-over-year, with Morgan Stanley projecting a 2025 price-to-earnings ratio of 15.5x, indicating a strong potential rebound [7].

manufacturing advancements and capacity

TSMC is set to ramp up production of its 2nm chips in the latter half of this year, further solidifying its technological advantage [1]. This move is crucial as Tesla is reportedly switching to TSMC for its next-generation Full Self-Driving (FSD) computer, utilizing 4nm and 5nm processes [3]. The upcoming Hardware 4 computer is expected to be about three times faster than the current Hardware 3 [3]. TSMC’s capacity to deliver advanced nodes is essential for companies pushing the boundaries of AI and autonomous driving [3].

geopolitical considerations and risks

TSMC’s advanced chips are primarily manufactured in Taiwan, highlighting geopolitical risks [1]. Uncertainty around tariffs, with a decision pending on May 7, adds another layer of complexity [7]. Despite these concerns, Morgan Stanley notes that no new risks have emerged, bolstering confidence in TSMC’s outlook [7]. The company’s ability to navigate these challenges is critical for maintaining its leading position and ensuring a stable supply of advanced semiconductors to the global market [7].

patent leadership and innovation

TSMC continues to demonstrate its commitment to innovation by leading invention patent applications in Taiwan for the sixth consecutive year [4]. In the first quarter, TSMC filed 305 invention patent applications, reflecting its ongoing efforts to upgrade technologies and stay ahead of global competitors [4]. This dedication to research and development is vital for sustaining its competitive edge and meeting the evolving demands of the semiconductor industry [4].

Bronnen

Chipmaker Dominance Semiconductor Leadership