Fundamentals snapshot
TSM · NYQ · Technology · Semiconductors
Current price
$426.82
52-week range
$202.28 - $450.16
Market cap
$2.21T
One-glance verdict
Fair-value range $3,973.96 – $9,419.09 (cautious → optimistic — tap the ? for the math)
Wall Street consensus: $467.84 (-92.5% lower than our fair-value estimate)
Buy below $5,020.51 for a 20% safety cushion
Balance sheet
Net cash $2.29T. Interest coverage shows how many times profit covers the interest bill.
What stands out
Quick scan of the biggest positives and negatives from the detailed checklist below.
What this company does
Taiwan Semiconductor Manufacturing Company (TSM) is the world's largest contract manufacturer of the tiny electronic chips that power our modern world. The company doesn't design its own chips; instead, it makes money by building them for other major tech companies like Apple, Nvidia, and AMD for use in iPhones, computers, and cars. This makes TSM a critical part of the global technology supply chain (the entire network of businesses involved in creating and getting a product to customers).
Founded in 1987 by the Taiwanese government and private investors, TSMC pioneered the "pure-play" foundry business model. This meant it focused solely on manufacturing chips designed by other companies, rather than designing and selling its own. This approach built trust and allowed "fabless" companies (companies that design chips but don't have their own factories) like NVIDIA and Apple to flourish. Continuous investment in research and development (R&D) and manufacturing technology allowed TSMC to eventually surpass its competitors in producing the most advanced and powerful chips. Key turning points included developing its own advanced technologies in the early 2000s and securing Apple as a major customer, which solidified its leadership position.
TSMC doesn't sell any products you can buy in a store under its own name. Instead, it operates as a giant, highly advanced factory for hire, a business model known as a "pure-play" foundry. Companies like Apple, Nvidia, and AMD, who design the powerful chips in your phone, computer, and gaming console, send their blueprints to TSMC. TSMC then uses its cutting-edge factories and technology to turn those designs into the physical microchips that power those devices. Essentially, TSMC is the critical, behind-the-scenes manufacturer for a huge portion of the world's most advanced electronics.
This is TSMC's largest business, making up the majority of its sales. This segment produces the most powerful and advanced chips for things like artificial intelligence (AI) systems, data centers (the massive computer warehouses that power the internet and cloud services), and supercomputers. Companies like Nvidia, a major designer of AI chips, rely on TSMC to manufacture their most cutting-edge processors. The explosive growth of AI has made this segment the main driver of TSMC's recent success.
For a long time, this was TSMC's biggest business, and it remains a very large and important part of the company. This segment manufactures the processors that act as the 'brain' for smartphones, including the A-series chips found in Apple's iPhones. While the demand for high-performance computing chips has grown faster recently, the constant need for newer, more powerful, and more energy-efficient chips in the latest phones keeps this business line crucial for TSMC. Apple is one of TSMC's single largest customers, making this relationship vital.
This segment produces a wide variety of smaller, efficient chips for the vast network of everyday objects connected to the internet. Think of smart watches, connected home devices, and sensors used in factories or cities. While not as large as the smartphone or high-performance computing businesses, it's a growing area as more and more devices become 'smart'. These chips often don't need to be the absolute most powerful, but they need to be small, reliable, and consume very little power.
This part of the business makes the growing number of chips required in modern cars. These chips control everything from the infotainment system and safety features like automatic braking to the complex systems in electric vehicles and future self-driving cars. As cars become more like computers on wheels, the demand for reliable and specialized automotive chips is increasing steadily. This makes it a small but strategically important and growing segment for TSMC.
TSMC's main focus is to stay ahead in the technology race by investing heavily in research and development (R&D) for the next generations of even smaller, faster, and more power-efficient chips, such as its 2-nanometer technology. The company is also significantly expanding its manufacturing capabilities for advanced packaging (a method of combining different chips into a single, more powerful unit) to meet the massive demand from the AI industry. To reduce geographic risk, TSMC is building new factories in other countries, including the United States, Japan, and Germany, to diversify its manufacturing footprint. Management sees sustained, long-term growth driven by the unstoppable demand for AI, high-performance computing, and increasingly sophisticated electronics in cars.
Price history
Is it cheap or expensive?
Wall Street consensus is the average analyst price target: $467.84 (-92.5% lower than our fair-value estimate).
Buy below $5,020.51 for a 20% safety cushion. That means buying at least 20% below our fair value, as a buffer in case our estimate turns out too rosy.
Our most-likely fair value is $6,275.64 a share — about 1,370.3% above today's price of $426.82, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Net cash $2,289.2B - more cash than debt. Interest coverage 156.5x.
Taiwan Semiconductor Manufacturing Company Limited's profit covers its interest bill about 156.5 times over. which is stronger than every peer shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Total debt $1.09T Interest coverage 156.51x This is the baseline the peer rows are being compared against.
Total debt $45.03B Interest coverage -0.02x -100% vs TSM This peer has almost no interest-payment cushion compared with TSM.
Total debt $28.14T Interest coverage 71.97x -54% vs TSM Carries about 2.2x less debt cushion than TSM.
Total debt $1.72B Interest coverage 15.94x -90% vs TSM Carries about 9.8x less debt cushion than TSM.
Total debt $76.04B Interest coverage 28.55x -82% vs TSM Carries about 5.5x less debt cushion than TSM.
Total debt $2.71B Interest coverage 95.53x -39% vs TSM Carries about 1.6x less debt cushion than TSM.
What you should know
The numbers
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Valuation
Profitability
Health
Growth
Cash flow
Dividend
Metric explainer
Debt comparison
What you should know