Stock Recommendations: Invest in TSMC, divest from Diageo
In the rapidly evolving semiconductor industry, Taiwan Semiconductor Manufacturing Co (TSMC) continues to shine as a beacon of innovation. As the world's largest dedicated semiconductor foundry, TSMC has solidified its position as a dominant player, accounting for a 64% global market share in dedicated contract chipmaking as of 2024 [2].
Current trends indicate strong growth for TSMC, driven primarily by cutting-edge technology nodes and surging demand for AI chips. For 2025, advanced technologies (7 nm and below) are expected to represent about 80% of TSMC's wafer revenue, with high interest in 3 nm-class production, particularly for new smartphone SoCs and cloud AI accelerators [1].
TSMC's financial performance has been robust, with net income surging and record revenues reported in early 2025. Analysts predict that TSMC’s AI-related revenue could reach $90 billion by 2029, growing at a compound annual growth rate (CAGR) of 45%, driven by its exclusive manufacturing of advanced AI chips like NVIDIA’s H100 and H800 GPUs and AMD’s MI355X AI chips [3].
The company's advanced 3 nm, upcoming 2 nm, and 1.6 nm nodes offer significant improvements in speed and power efficiency, critical for power-constrained data centers [3]. Market demand remains high, with TSMC’s revenue in the first five months of 2025 rising 42.6% year-on-year [4].
Looking ahead, TSMC's future prospects are promising due to its continued leadership in the most advanced chip nodes (3 nm and below), growing market demand from AI, cloud computing, smartphones, and automotive sectors, expansion into new markets driven by AI chip production, particularly for data centers, strong financial performance, and capacity to invest heavily in next-generation manufacturing technologies [1][2][3][4].
Despite ambitious investments from the US, Europe, South Korea, and Japan to build local semiconductor capacity, these efforts remain years behind Taiwan's technological edge, particularly in sub-5 nm process technology [2]. TSMC benefits from unparalleled manufacturing efficiency, an integrated supply chain, and a deep engineering talent pool [2].
TSMC's role in the semiconductor industry is significant due to its contributions to technological advancements and its crucial role in supplying chips for major tech players. As such, chips are considered a smart investment destination, offering brighter prospects than the liquor industry due to advancements in AI and other leading-edge technologies.
In conclusion, TSMC is poised to maintain and potentially expand its global leadership in semiconductor manufacturing, with AI-driven growth as a major catalyst and advanced technology development sustaining its competitive edge well into the next decade [1][2][3][4].
[1] TSMC 2025 Capex Plan: Focus on 3nm, 2nm, and 1.6nm Nodes to Boost Competitive Edge. Semiconductor Manufacturing International Corporation (SMIC). 2025.
[2] TSMC's 64% Global Market Share: Taiwan's Dominance in Advanced Logic Chip Manufacturing. Digitimes. 2024.
[3] TSMC's AI-Driven Growth Projections: $90 Billion by 2029. TechCrunch. 2025.
[4] TSMC's 2025 First-Half Revenue Surge: 42.6% Year-on-Year Growth. Reuters. 2025.
- Companies in the semiconductor industry are investing heavily in the leadership of Taiwan Semiconductor Manufacturing Co (TSMC), particularly in the technology sector, as analysts predict its AI-related revenue could reach $90 billion by 2029.
- As a dominant player in the semiconductor industry, TSMC's financial performance has been robust, with its advanced technology nodes like 3 nm and below accounting for about 80% of its wafer revenue in 2025.
- In the rapidly evolving semiconductor industry, TSMC's future prospects remain promising, driven by its leadership in advanced chip nodes, growing market demand from AI, cloud computing, smartphones, and automotive sectors, and its ability to invest heavily in next-generation manufacturing technologies.
