One-glance verdict
Overvalued
$210.16 our estimate vs market $428.91
Wall Street consensus: $552.38 (162.8% higher than our fair-value estimate)
104% above our estimate, beyond the bull case
Fundamentals snapshot
Taiwan Semiconductor Manufacturing Company Limited
TSM · NYQ · Technology · Semiconductors
Current price
$428.91
52-week range
$241.62 - $479.00
Market cap
$2.22T
Balance sheet
Healthy
156.51x Strong cushion
Net cash $77.42B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 31.6% last year.
- Reward Returns 40.0% on equity, ahead of 66% of its peers.
- Risk Stock trades 4427.0% above its 5-year average P/E.
- Risk Insider ownership is only 0.0% (peer median: 0.2%).
What this company does
Taiwan Semiconductor Manufacturing Company Limited
Taiwan Semiconductor (TSM) is the world's largest manufacturer of semiconductors, which are the tiny electronic "brains" that power everything from our phones to our cars. The company doesn't design its own chips; instead, major tech companies like Apple and Nvidia pay TSM to build the chips they've designed. This makes TSM a critical partner in the global technology supply chain (the network of companies that get a product from idea to customer), as it builds the most advanced chips for the world's biggest brands.
How the company got here
Taiwan Semiconductor Manufacturing Company, or TSMC, was founded in 1987 by Morris Chang with backing from the Taiwanese government. It pioneered the "pure-play foundry" business model, which was a revolutionary idea at the time. Instead of designing and selling its own chips like other companies, TSMC focused exclusively on manufacturing chips that other companies designed. This allowed "fabless" companies (companies that design chips but don't have their own factories) to thrive, and TSMC became the go-to manufacturer for industry giants. Over the decades, through immense investment in research and development, TSMC became the world leader in producing the most advanced and smallest chips, a critical component for modern electronics.
What it actually does
Imagine a company that doesn't create its own products but instead has the world's most advanced factories to build products for others. That's TSMC, but for computer chips (also called semiconductors). Companies like Apple, Nvidia, and Qualcomm design the powerful chips that act as the 'brains' in your iPhone, gaming console, or computer, and then they hire TSMC to actually produce them. TSMC takes these designs and uses incredibly complex and expensive machinery to manufacture them onto silicon wafers, which are thin slices of semiconductor material. Essentially, TSMC is a highly specialized contract manufacturer that turns chip blueprints into the physical chips that power our digital world.
High Performance Computing (HPC)
This is TSMC's largest and fastest-growing business area, making up the majority of its revenue. This segment involves manufacturing the most powerful and advanced chips for things like artificial intelligence (AI) servers, data centers, and supercomputers. Companies that are building the infrastructure for AI and cloud computing pay TSMC to produce these high-end processors. The explosive growth in AI has created massive demand for these specialized chips, making this segment a key driver of TSMC's success.
Smartphones
For a long time, this was TSMC's biggest business, and it remains a very large portion of its sales. This part of the company manufactures the processors that power smartphones from major brands. These chips need to be both powerful and extremely energy-efficient to give phones long battery life. As phones have become more like pocket-sized computers, the complexity and importance of the chips inside them have grown, keeping demand strong for TSMC's advanced manufacturing.
Internet of Things (IoT)
This segment produces a wide variety of chips for the growing world of 'smart' devices that connect to the internet, such as smart watches, home security cameras, and connected appliances. These chips often don't need to be the absolute most powerful, but they do need to be very low-cost and consume very little power. As more everyday objects become connected, this business provides a steady and diverse source of revenue for TSMC.
Automotive
This part of the business manufactures the growing number of chips used in modern cars. Today's vehicles use semiconductors for everything from the infotainment system and safety features like automatic braking to managing the engine and battery in electric cars. As cars become more technologically advanced and move towards autonomous driving, the number of chips required per vehicle is increasing, making this a significant growth area for the company.
What management is betting on now
TSMC is heavily focused on maintaining its technological lead by investing billions in research and development for the next generations of even smaller and more powerful chips, such as its 2-nanometer technology. The company is also betting big on the continued explosion in Artificial Intelligence, which requires the most advanced chips that only TSMC can currently produce in large volumes. To address geopolitical concerns about having most of its factories in Taiwan, management is also strategically expanding its manufacturing footprint globally, with new plants being built in the United States, Japan, and Germany. Another key focus is advanced packaging, a technology that involves combining different chips together in innovative ways to boost performance.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $210.16 vs current price $428.91
Wall Street consensus is the average analyst price target: $552.38 (162.8% higher than our fair-value estimate).
Our most-likely fair value is $210.16 a share — about 51.0% below today's price of $428.91, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Healthy
Net cash $77.4B - more cash than debt. Interest coverage 156.5x.
Net debt
$-77.42B
Interest coverage
156.51x
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.
Healthy
Worse cushion
Baseline
Better cushion
TSM
BASELINE
Taiwan Semiconductor Manufacturing Company Limited
Total debt $33.77B Interest coverage 156.51x This is the baseline the peer rows are being compared against.
Total debt $50.54B Interest coverage -0.02x -100% vs TSM This peer has almost no interest-payment cushion compared with TSM.
Total debt $16.65B Interest coverage 71.97x -54% vs TSM Carries about 2.2x less debt cushion than TSM.
Total debt $1.68B Interest coverage 15.94x -90% vs TSM Carries about 9.8x less debt cushion than TSM.
Total debt $2.01B Interest coverage 28.55x -82% vs TSM Carries about 5.5x less debt cushion than TSM.
Total debt $6.38B Interest coverage 20.56x -87% vs TSM Carries about 7.6x less debt cushion than TSM.
What you should know
The case for and against TSM
3 Rewards
2 Risks
Rewards
-
Revenue grew 31.6% last year.
-
Returns 40.0% on equity, ahead of 66% of its peers.
-
Free cash flow was positive in 4/10 years.
Risks
-
Stock trades 4427.0% above its 5-year average P/E.
-
Insider ownership is only 0.0% (peer median: 0.2%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
31.84x
Forward P/E
19.62x
P/B
88.29x
P/S
0.50x
EV/EBITDA
4.86x
PEG ratio
0.81x
Profitability
How much profit each dollar creates
Gross margin
64.2%
Operating margin
60.3%
Net margin
49.9%
ROE
40.0%
ROA
19.0%
Health
Liquidity and balance-sheet strength
Debt / equity
0.17x
Current ratio
2.46x
Quick ratio
2.13x
Total debt
$33.77B
Total cash
$111.19B
Growth
How the business has been compounding
Revenue TTM
$140.34B
Revenue 5Y CAGR
18.9%
EPS TTM
13.47
EPS 5Y CAGR
19.1%
Cash flow
How much cash the business throws off
Operating CF TTM
$71.90B
Free CF TTM
$31.36B
FCF margin
22.3%
Dividend
Shareholder payout
Yield
0.9%
Payout ratio
25.7%
Last ex-div date
2026-09-16