The Motley Fool Did a Deep Dive Into TSMC’s Revenue by Technology, Platform, and Geography. Here’s What It Found.

• Taiwan Semiconductor Manufacturing Firm makes 60% of its gross sales by manufacturing a few of the most superior semiconductors in the marketplace.

• The corporate has an estimated 90% of the superior processor market, and greater than half of its income comes from the high-performance computing area.

• TSMC sells largely to North American tech corporations, they usually might spend trillions of {dollars} by 2030 to construct out new AI knowledge facilities.

• 10 stocks we like better than Taiwan Semiconductor Manufacturing ›

Taiwan Semiconductor Manufacturing Firm (NYSE: TSM), often known as TSMC, is without doubt one of the premier producers of superior processors, a lot of that are used for artificial intelligence. The corporate’s robust place on this area and its development over the previous few years have resulted in its inventory value hovering practically 200% over the previous three years.

Latest research from The Motley Fool sheds some gentle on how TSMC’s manufacturing expertise is a step forward, the way it makes nearly all of its income, and the place most of its prospects are positioned. Importantly, all of those elements work collectively to set TSMC aside from the competitors and make its inventory a sensible one to personal for years to return.

TSMC manufactures a few of the world’s most superior processors, and the breakdown of the corporate’s income reveals simply how a lot comes from its completely different manufacturing capabilities. Chip corporations use the time period chip node to explain what number of transistors will match onto a semiconductor, with the unit of chip measurement being nanometers (nm). Usually talking, the smaller, the extra superior the processor.

Here is a snapshot of Taiwan Semiconductor’s high 5 income turbines, by chip measurement:

Knowledge supply: Taiwan Semiconductor.

This income composition is vital to focus on as a result of it reveals {that a} whopping 60% of the corporate’s semiconductor gross sales are from the smallest and most superior processors (3nm and 5nm) in the marketplace.

No different firm compares to TSMC’s manufacturing prowess, and it is prone to proceed outpacing the competitors. TSMC has already signal 15 offers with tech corporations for 2nm semiconductor manufacturing, leaving rivals, together with Samsung, far behind.

Simply as vital because the expertise behind TSMC’s income is what applied sciences these processors energy. If we return 5 years, smartphones had been the driving income drive for TSMC. Now, it is high-performance computing (suppose AI knowledge facilities).

The corporate has dominated the manufacturing of superior processors so effectively, in actual fact, that TSMC makes an estimated 90% of the world’s most superior processors.

Right here is the corporate’s income distribution over the previous 4 quarters:

Knowledge supply: Taiwan Semiconductor.

TSMC’s making nearly all of its income from high-performance computing is vital as a result of it reveals that the corporate efficiently tailored with the instances, transferring from its beforehand dominant smartphone section to gross sales from chips to AI knowledge facilities.

Extra development might be on the best way, too, contemplating that semiconductor chief Nvidia believes expertise corporations might spend as much as $4 trillion on AI knowledge heart infrastructure over the subsequent 5 years.

Taiwan Semiconductor relies in, you guessed it, Taiwan, however the overwhelming majority of its gross sales come from promoting processors to North American corporations. About 5 years in the past, North America accounted for simply over half of TSMC’s gross sales, however that is jumped to 75% presently. China and the Asia-Pacific area tie for second place with simply 9% every.

Why does this matter? A few of the most superior synthetic intelligence corporations, together with Nvidia, OpenAI, Microsoft, Meta, and Alphabet, are based mostly in North America. Taiwan Semiconductor’s shift towards gross sales on this geographic space is a mirrored image of the corporate efficiently attracting the world’s main AI corporations to have their chips made by TSMC.

With TSMC making an estimated 90% of the world’s most superior processors, the corporate outpacing its manufacturing competitors, and synthetic intelligence corporations poised to spend trillions of {dollars} to construct out and improve knowledge facilities, TSMC is effectively positioned to be an excellent AI inventory for years to return.

Simply remember the fact that the stellar positive factors TSMC inventory has skilled over the previous a number of years have been a results of the early AI growth, which implies future returns will not be fairly as spectacular.

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Chris Neiger has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Alphabet, Intel, Meta Platforms, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Idiot recommends the next choices: lengthy January 2026 $395 calls on Microsoft, brief January 2026 $405 calls on Microsoft, and brief November 2025 $21 places on Intel. The Motley Idiot has a disclosure policy.

The Motley Fool Did a Deep Dive Into TSMC’s Revenue by Technology, Platform, and Geography. Here’s What It Found. was initially revealed by The Motley Idiot