Taiwan Semiconductor Manufacturing Company (TSMC) controls over 90% of the advanced AI chip foundry market, producing the vast majority of cutting-edge 5-nanometer and 3-nanometer wafers used in data-center GPUs, custom AI accelerators and high-performance computing systems. Its precision lithography and yield rates—exceeding 85% on its most advanced nodes—outpace competitors, making TSMC the indispensable partner for key AI players such as Nvidia, AMD and leading cloud providers.

In fiscal 2025, TSMC delivered its first ever $100 billion revenue year, closing with $122.4 billion—a 36% increase over 2024. Gross margin expanded from 56.1% to 59.9%, while operating margin rose from 45.7% to 50.8%. In Q4 alone, the foundry reported a gross margin of 62.3% and an operating margin of 54%, underscoring both strong pricing power and operational efficiency.

Despite a 69% share-price gain since the start of 2025, TSMC trades at approximately 25 times projected 12-month earnings—below the multiples of other leading semiconductor firms. This valuation discounts the company’s dominant market share, robust margins and sustained revenue growth, suggesting a compelling long-term entry point for investors seeking AI infrastructure exposure.

TSMC forecasts revenue growth near 30% for 2026 and plans to increase capital expenditures to $52–56 billion to expand capacity for its N3 and forthcoming N2 process nodes. This capex boost will fund new fabs in Taiwan and the U.S., targeting up to 180,000 monthly wafers on 3-nanometer and scaling N2 capacity toward 140,000 wafers per month by year-end, positioning TSMC to meet surging AI demand through 2027.