Motley fool was deeply immersed in TSMC
Understanding what causes Taiwan Semiconductor Tick to explain why this company dominates the production of AI processors.
Tai -Wan semiconductor manufacturing company (TSM 1.50%)Also known as TSMC, it is one of the first manufacturers of advanced processors, many of which are used for artificial intelligence. The strong position of the company in this space and its growth has led to almost 200%in the last three years in the last few years.
Recent research from Motley Fool casts some light on how TSMC production technology is a step ahead, how most of its income does and where most of its customers are. Importantly, all these factors work together to distinguish the TSMC and make its shares smart, which owns for the coming years.
https://www.youtube.com/watch?v=om4ufi_6gki
1. The company is a leader in the production of advanced chips
TSMC produces some of the most advanced processors in the world and the company’s return on the company shows how much it comes from different production capabilities. Chip uses the term chip node to describe how many transistors can fit on the semiconductor, while the chip measurement unit is nanometers (NM). Generally speaking, the smaller the more advanced the processor.
Here is the image of the Tai -Wan semiconductor’s best five returned generators according to the size of the chips:
|
Quarter |
3nm |
5nm |
7nm |
16/20nm |
28nm |
|---|---|---|---|---|---|
|
Q2 2025 |
24% |
36% |
14% |
7% |
7% |
Data source: Taiwan Semiconductor.
This returned composition is important to emphasize because it shows that an incredible 60% of the sales of the company’s semiconductors come from the smallest and most advanced processors (3nm and 5nm) on the market.
No other company compares to TSMC’s bravery and is likely to continue to overwhelmed the competition. TSMC already signs 15 technology companies stores for 2nm semiconductor production that leaves the opponent, including SamsungFar behind.
2 .. its advanced processors control its growth
As important as the technology for returning TSMC is what technology to power these processors. If we return for five years, smartphones that we are driving for strength for TSMC. Now it is a high -performance computer technology (I mean data centers AI).
The company dominated the production of advanced processors so well that TSMC accounts for 90% of the most advanced processors in the world.
Here is the division of the company’s income above the past:
|
Quarter |
High -performance calculation |
Smartphone |
The Internet of Things |
Car |
Digital consumer electronics |
Other |
|---|---|---|---|---|---|---|
|
Q2 2025 |
60% |
27% |
5% |
5% |
1% |
2% |
|
Q1 2025 |
59% |
28% |
5% |
5% |
1% |
2% |
|
Q4 2024 |
53% |
35% |
5% |
4% |
1% |
2% |
|
Q3 2024 |
51% |
34% |
7% |
5% |
1% |
2% |
Data source: Taiwan Semiconductor.
The TSMC, which has returned from its returned from high -performance computers, is important because it shows that the company has successfully adapted times and is moving from the previously dominant smartphone segment to sale from chips to data centers AA.
More growth could also be on the way, given that the leader of the semiconductors Nvidia Believe that technology companies could spend 4 trillion dollars In the next five years we have a data center infrastructure.
3. He asked American technical giants
Taiwan Semiconductor is located, you are estimated, Tai -Wan, but the vast majority of its sales come from the sale of processors to North American companies. About five years ago, North America was charged for just over half of the TSMC sales, but it currently jumped to 75%. China and the Asian-Tichoral region will join second place with only 9%.
Why does it matter? Some of the most advanced artificial intelligence companies, including NVIDIA, OPENI, Microsoft,, Metaand AlphabetIt is located in North America. Tai -Wan’s Semiconductor shift for sale in this geographical is a reflection of a company that successfully attracts the world’s leading AI companies to make their chips to carry out TSMCs.
Is Taiwan a semiconductor purchase?
As TSMC produced an estimated 90% of the most advanced processors in the world, the company surpasses production compartments and artificial intelligence companies ready to spend trillions of dollars on the construction and upgrade of data centers, TSMC is well position in the coming years.
Just keep in mind that the TSMC has experienced in the last few years, it was the result of an early AI, which means that future yields may not be as impressive.
Chris Neiger has no position in any of the shares. Motley Beble has positions and recommends the production of alphabet, Intel, Meta, Microsoft, Nvidia and Tai -wan. Motley Beble recommends the following options: long January 2026 395 $ call on Microsoft, short January 2026 405 calls on Microsoft and short November 2025 $ 21 is being built on Intel. Motley fool has a publication of politics.