TSMC

What it is

Taiwan Semiconductor Manufacturing Company (TSMC, TWSE: 2330 / NYSE: TSM), headquartered in Hsinchu, Taiwan, is the world's largest dedicated chip foundry: it manufactures semiconductors designed by others and owns no end products of its own. In 2025, TSMC produced 12,682 distinct products using 305 process technologies for 534 customers, from a global logic capacity exceeding 17 million 12-inch-equivalent wafers. As of Q1 2026, TSMC held 72.3% of global foundry revenue by market share, a margin so wide that Samsung, its nearest rival, held roughly 7%. The company carries the semiconductor industry's highest credit ratings (S&P: AA-, Moody's: Aa3).

History

Morris Chang founded TSMC in February 1987 in Hsinchu, backed by Taiwan's National Development Fund with a 48.3% equity stake and Philips, which contributed process IP and patents in exchange for 27.6% equity. Starting capital was approximately US$220 million. Chang's core insight, separating chip design from fabrication, let fabless designers scale without the billions required to build a fab. Qualcomm, Nvidia, and AMD all grew under this model. TSMC listed on Taiwan's stock exchange in 1994 and launched its NYSE American Depositary Receipt program in 1997. Revenue has compounded at 18.6% annually since the 1994 listing. By the mid-2000s, TSMC was the primary supplier for Apple's A-series processors; by 2020, it had surpassed Intel in process node density, a shift that redefined which country controlled the leading edge of computing.

Current state

In fiscal 2025, TSMC reported revenue of US$122.54 billion, up 36.1% year-over-year, driven by AI accelerator demand. The N2 (2-nanometer) node entered volume production in Q4 2025 at Hsinchu and Kaohsiung facilities; N2P is targeted for H2 2026. TSMC guided full-year 2026 revenue growth above 30% in US-dollar terms. The US expansion program is the most capital-intensive story in recent semiconductor history: four Arizona fabs are reportedly fully booked, cumulative US capex has surpassed US$165 billion, and a long-term framework targets roughly US$465 billion. TSMC filed its 2025 annual report on Form 20-F with the US SEC on April 16, 2026. It paid US$15.0 billion in dividends in 2025 and has never reduced its per-share dividend since beginning payouts in 2004.

Relationships

Nvidia and Apple are widely believed to be TSMC's largest customers by revenue; both are effectively locked in at leading nodes where no credible alternative manufacturer exists at volume. Arm's first in-house silicon, a 136-core server processor built on TSMC's 3nm process, illustrates how even pure IP licensors now depend on TSMC manufacturing. Intel's 14A foundry push is the most discussed potential rival at the leading edge, but as of mid-2026 Intel had zero committed external customers for 14A. Geopolitically, Taiwan's government treats TSMC as a strategic anchor for the island's security calculus. The US government tied CHIPS Act subsidies to the Arizona build-out, seeking geographic diversification of advanced-node supply. The company's Hsinchu and Kaohsiung campuses remain the irreplaceable heart of the global AI hardware supply chain.

What to watch

Advanced packaging, not raw wafer capacity, is the binding constraint on AI silicon supply: TSMC's CoWoS and SoIC packaging lines pace Nvidia GPU and Apple chip production. Arizona Fab 2's 3nm ramp is scheduled for H2 2027; whether that timeline holds is the single most-watched US industrial capex milestone. TSMC Q2 2026 earnings, due mid-July 2026, will provide the first public read on whether AI demand is re-accelerating after Q1 2026's record foundry share. Progress on sub-2nm processes, including A16 and N1.4, will determine which node captures the next generation of AI platforms and who tapes out first.