Taiwan Is On The Map

I know it’s not the sexiest choice but there is a chip company in Taiwan that readers need to look at.

This company has investments all over the world and is the leader in what they do.

They are also involved in AI which lately has been the ticket to riches.

Taiwan Semiconductor Manufacturing Company (TSM) may not seem like a glamorous AI stock, but it's as critical to the AI future.

To understand TSMC's role in AI, you need to understand how we get to end consumer-facing products like ChatGPT, Bard, and other generative AI applications.

For AI to be effective, it must be trained using lots of data -- quantities that must be stored in specialized data centers.

Data centers rely on graphic processing units (GPUs), which are essentially the brains of AI computing systems.

TSMC and the semiconductors it manufactures for its client companies are crucial in this process. These GPUs rely heavily on TSMC's best-in-class manufacturing processes.

This AI knock-on effect hasn't impacted TSMC's financials yet, but management said they expect sales of its AI-related semiconductors to grow at a compound annual rate of 50% for at least the next few years.

By 2027, AI-related semiconductors are expected to be responsible for a large part of the company's revenue.

TSMC will absolutely be additive to the AI ecosystem.

Let’s talk about their products.

TSMC's 3nm fabrication process accounted for 15% of the company's revenue in 2023.

Only one of TSMC's customers used it at the time:

Apple (AAPL).

The three-nanometer product is where it’s at.

Wasn’t it just a year or 2 ago we were at 7 nanometers?

As more customers adopt the manufacturing process, 3nm process nodes will account for a considerably larger share of TSMC's revenue.

This year TSMC's N3-series nodes — including N3B and N3E — will account for over 20% of the foundry's revenue in 2024.

Apple currently exclusively uses TSMC's N3B to make its A17 Pro system-on-chip (SoC) for smartphones, as well as the M3-series processors for iMac desktops and MacBook laptops.

AMD is preparing to launch its new Zen 5-based processors made on 3nm- and 4nm-class process technologies later this year.

Apple's new iPhone 16 series will be equipped with the A18-series processor, and the upcoming M4-series processors for Mac PCs will also be produced using TSMC's 3nm technology.

This marks the first time Intel has entrusted TSMC with the full range of chips for its mainstream consumer platform, the report notes.

This collaboration highlights TSMC's expanding role in serving Intel, which also happens to be the company's rival in the foundry market.

With three major customers using TSMC's 3nm family of process technologies, this company needs to be on readers’ radar.

More companies are expected to adopt TSMC's N3 nodes in 2025, including performance-enhanced N3P, and the report suggests 3nm will account for over 30% of TSMC earnings in 2025.

It’s easy to see with the mushrooming of business for TSMC, how they are a highly sought-after stock.

It also explains why the stock has been on a tear.

It was only just last May they were trading at $82 per share and fast forward to today at the stock sits at $136 per share.

Holding this stock long term has borne fruit and every big should be bought.

They will continue to be the best at what they do.