Executive Summary & Investment Thesis

This section provides the core investment thesis. Our BUY rating is anchored on TSMC's structural dominance in leading-edge semiconductor manufacturing, supercharged by the secular growth in Artificial Intelligence. The company is the indispensable partner for the AI revolution, granting it unparalleled pricing power and a clear growth trajectory through 2030.

12-Month Price Target

$255.00

Current Price (June '25)

$211.10

Potential Upside

~21%

Forward P/E (2025E)

~22.7x

We acknowledge the significant geopolitical risk from the company's concentration in Taiwan, which rightly tempers valuation multiples. However, our analysis concludes that the market overstates this risk relative to TSMC's long-term earnings power, strategic global diversification, and its "Silicon Shield" status. The company's financial models indicate the market is underappreciating the magnitude and longevity of the high-margin revenue stream from the High-Performance Computing (HPC) segment, which has fundamentally de-risked the business model from consumer electronics cyclicality.

The Linchpin of the Digital Economy

TSMC's formidable economic moat is built on three reinforcing pillars. This deep, structural advantage is what protects its long-term profitability and market leadership. Explore the revenue mix in the chart to understand the shift towards high-margin AI-driven demand.

1

Unrivaled Technological Leadership

A multi-generational lead in process technology (3nm, 2nm), with advanced nodes (≤7nm) now comprising 73% of revenue.

2

Insurmountable Scale & Capital Intensity

A 2025 CapEx budget of $38-42B dwarfs competitors, creating an insurmountable barrier to entry.

3

Deeply Integrated Customer Ecosystem

The Open Innovation Platform® (OIP) creates extremely high switching costs for customers like Apple and Nvidia.

Revenue by Platform (Q1 2025)

Hover over a segment to see details.

Financial Deep Dive

This section presents TSMC's validated Trailing Twelve Month (TTM) financial performance and our projections through 2030. The interactive chart below visualizes the core financial story: robust revenue growth driven by AI, coupled with a slight, strategically planned compression in gross margin percentages due to global diversification. Despite the margin percentage dip, absolute gross profit is projected to expand significantly.

Revenue & Gross Margin Forecast (2025-2030)

Validated TTM Financials

Revenue (TTM)$99.79 B

Gross Margin58.0%

Operating Margin47.8%

Net Margin45.6%

EPS (TTM, per ADR)$8.78

Free Cash Flow (TTM)$29.50 B

ROE31.5%

The Foundry Gauntlet: A Competitive Deep Dive

The foundry landscape is a fierce contest of technology, capital, and geopolitics. TSMC is the undisputed leader, but Intel is an aggressive challenger backed by the U.S. government, while Samsung struggles with execution. The radar chart below provides a visual summary of the competitive landscape across key strategic vectors.

Competitive Strategic Analysis

Strategic Benchmarking Matrix

Competitor	Market Share	Threat Level
Intel (INTC)	~2% (Foundry)	Medium but Rising
Samsung	~8%	Low-to-Medium
SMIC (China)	~5.5%	Low (Economic), High (Geopolitical)

Intel represents the most credible long-term threat with its aggressive roadmap and U.S. government backing. Samsung's foundry is plagued by execution failures, while SMIC is a state-sponsored tool for Chinese self-sufficiency, not a true commercial competitor.

Geopolitical Risk Simulator

The primary risk to the TSMC thesis is its geographic concentration in Taiwan. Our model assigns probabilities to three key scenarios to derive a risk-adjusted valuation. Use the sliders below to adjust the probabilities for each scenario and see how the "Geopolitically-Adjusted Value" changes. This tool allows you to test your own assumptions about the likelihood of these low-probability, high-impact events.

Status Quo Probability: 75%

Blockade Probability: 20%

Invasion Probability: 5%

Geopolitically-Adjusted Intrinsic Value

$193.25

Valuation: Pricing a Generational Asset

Our valuation is derived from a Discounted Cash Flow (DCF) model, blended with relative valuation. We present three DCF scenarios to capture a range of outcomes. Our Base Case, which is assigned the highest probability, suggests significant upside from the current price, even after factoring in a higher-than-normal discount rate to account for geopolitical risk.

Bear Case

$172.50

Slower growth (12% CAGR), higher WACC (10.5%).

Base Case

$235.15

Core view (18% CAGR), 9.5% WACC.

Bull Case

$291.80

AI super-cycle exceeds expectations (22% CAGR), lower WACC (9.0%).

DCF Sensitivity Analysis (Base Case)

WACC	Terminal Growth Rate
WACC	3.0%	3.5%	4.0%
9.0%	$238.90	$256.40	$277.30
9.5%	$218.60	$235.15	$254.60
10.0%	$200.75	$216.00	$233.85