One-glance verdict
Overvalued
$194.11 our estimate vs market $406.11
Wall Street consensus: $540.20 (178.3% higher than our fair-value estimate)
109% above our estimate, beyond the bull case
Fundamentals snapshot
Taiwan Semiconductor Manufacturing Company Limited
TSM · NYQ · Technology · Semiconductors
Current price
$406.11
52-week range
$223.70 - $479.00
Market cap
$2.11T
Balance sheet
Healthy
156.51x Strong cushion
Net cash $78.30B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 31.6% last year.
- Reward Returns 40.0% on equity, ahead of 66% of its peers.
- Reward Free cash flow was positive in 4/10 years.
- Risk Stock trades 4982.5% above its 5-year average P/E.
What this company does
Taiwan Semiconductor Manufacturing Company Limited
Taiwan Semiconductor (TSM) is like a factory for the world's most advanced computer chips, the tiny "brains" that power everything from iPhones to artificial intelligence. TSM doesn't design its own branded chips; instead, it earns money by manufacturing them for other major technology companies like Apple, NVIDIA, and AMD. This central role makes TSM a critical part of the global technology supply chain (the network of companies involved in creating and delivering a product), as most of the world's cutting-edge electronics rely on its factories.
How the company got here
Taiwan Semiconductor Manufacturing Company, or TSMC, was founded in Taiwan in 1987 by Morris Chang. Before TSMC, most technology companies that designed computer chips also had to build their own expensive factories to make them. TSMC introduced a new idea called a "pure-play foundry," which is a dedicated factory that only manufactures chips for other companies. This model was revolutionary because it allowed other companies to focus on designing great chips without needing to spend billions on factories. This helped create a whole new wave of chip design companies, like NVIDIA and Qualcomm, who are now some of TSMC's biggest customers.
What it actually does
Think of TSMC as a highly specialized factory for computer chips, which are the tiny electronic brains inside everything from your smartphone to your car and the massive computers that power the internet. Companies like Apple or AMD design the chips, creating the blueprints for what they want the chip to do. They then send these blueprints to TSMC, who uses its incredibly advanced and expensive factories to turn those designs into physical, working chips. TSMC doesn't design its own branded chips; it is purely a manufacturer-for-hire for hundreds of other technology companies.
High-Performance Computing (HPC)
This is now TSMC's largest and fastest-growing business, making up more than half of its sales. This segment produces the most powerful and advanced chips for things like artificial intelligence (AI), servers that run cloud services (like Netflix or Google), and powerful personal computers. Companies like Nvidia, who design the leading AI chips, pay TSMC to manufacture these complex processors. The explosive growth of AI has created huge demand for the cutting-edge chips made by this part of the company.
Smartphones
For a long time, this was TSMC's biggest business, and it still accounts for a very large slice of its revenue, roughly a quarter of the total. This division makes the critical processors that power smartphones from major brands, including the A-series chips for Apple's iPhone. When you hear about a new, more powerful and power-efficient chip in the latest iPhone, it's very likely that TSMC's factories built it. While the smartphone market's growth has slowed, the demand for more advanced chips in new phones keeps this segment very important for TSMC.
Internet of Things (IoT)
This part of the business creates chips for a huge variety of smart, connected devices, which is a small but growing slice of revenue. Think of smart watches, digital TVs, smart speakers, and other home gadgets that connect to the internet. These chips don't always need to be the absolute most powerful, but they need to be very power-efficient to save battery life. Companies making these electronics pay TSMC to produce the specialized chips that give their products their "smart" capabilities.
Automotive
This is another smaller but increasingly important segment for TSMC. Modern cars are packed with computer chips that control everything from the engine and safety systems to the dashboard entertainment screen and driver-assistance features. As cars become more like computers on wheels, especially with the rise of electric and self-driving vehicles, the demand for reliable and advanced automotive chips is growing quickly. Car manufacturers and their parts suppliers rely on TSMC to produce these critical components.
What management is betting on now
TSMC's main strategy is to stay at the absolute cutting edge of chip manufacturing technology, which competitors find very difficult to match. The company is spending tens of billions of dollars on research and development and new factories to produce the next generation of even smaller, faster, and more powerful chips (like their 2-nanometer technology). To reduce geographic risk from having most of its factories in Taiwan, TSMC is also building new major factories in other countries, including the United States, Japan, and Germany. Management is heavily focused on capturing the massive growth in artificial intelligence, ensuring they are the go-to manufacturer for all the companies building the future of AI.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $194.11 vs current price $406.11
Wall Street consensus is the average analyst price target: $540.20 (178.3% higher than our fair-value estimate).
Our most-likely fair value is $194.11 a share — about 52.2% below today's price of $406.11, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Healthy
Net cash $78.3B - more cash than debt. Interest coverage 156.5x.
Net debt
$-78.30B
Interest coverage
156.51x
Taiwan Semiconductor Manufacturing Company Limited's profit covers its interest bill about 156.5 times over. which is stronger than every peer shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
TSM
BASELINE
Taiwan Semiconductor Manufacturing Company Limited
Total debt $30.34B Interest coverage 156.51x This is the baseline the peer rows are being compared against.
Total debt $50.54B Interest coverage -0.02x -100% vs TSM This peer has almost no interest-payment cushion compared with TSM.
Total debt $15.67B Interest coverage 71.97x -54% vs TSM Carries about 2.2x less debt cushion than TSM.
Total debt $1.72B Interest coverage 15.94x -90% vs TSM Carries about 9.8x less debt cushion than TSM.
Total debt $1.96B Interest coverage 28.55x -82% vs TSM Carries about 5.5x less debt cushion than TSM.
Total debt $2.28B Interest coverage 95.53x -39% vs TSM Carries about 1.6x less debt cushion than TSM.
What you should know
The case for and against TSM
3 Rewards
1 Risk
Rewards
-
Revenue grew 31.6% last year.
-
Returns 40.0% on equity, ahead of 66% of its peers.
-
Free cash flow was positive in 4/10 years.
Risks
-
Stock trades 4982.5% above its 5-year average P/E.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
35.75x
Forward P/E
18.79x
P/B
84.69x
P/S
0.47x
EV/EBITDA
4.52x
PEG ratio
0.98x
Profitability
How much profit each dollar creates
Gross margin
64.2%
Operating margin
60.3%
Net margin
49.9%
ROE
40.0%
ROA
19.0%
Health
Liquidity and balance-sheet strength
Debt / equity
0.15x
Current ratio
2.46x
Quick ratio
2.13x
Total debt
$30.34B
Total cash
$108.64B
Growth
How the business has been compounding
Revenue TTM
$137.12B
Revenue 5Y CAGR
18.9%
EPS TTM
11.36
EPS 5Y CAGR
19.1%
Cash flow
How much cash the business throws off
Operating CF TTM
$70.25B
Free CF TTM
$30.65B
FCF margin
22.3%
Dividend
Shareholder payout
Yield
0.9%
Payout ratio
27.9%
Last ex-div date
2026-09-16