Semiconductor foundry giant Taiwan Semiconductor Manufacturing Company (TSM) just got a massive vote of confidence from the undisputed industry leader. During his visit to Taiwan, Nvidia (NVDA) CEO Jensen Huang praised TSM as “one of the greatest companies in the history of humanity,” and added that “anybody who wants to buy TSMC stock is a very smart person.”
Huang highlighted Taiwan Semi’s work on Nvidia’s Rubin chip, and told reporters that the manufacturer is working on six more artificial intelligence (AI) products for Nvidia. “We have many, many employees here in Taiwan, and we’re growing here in Taiwan because our supply chain is so busy here,” explained Huang.
TSM stock has ticked fractionally higher ahead of the bell this morning. The chip stock has had a tough week amid selling in large-cap AI names, with TSM breaking below its 50-day moving average in recent sessions. The shares are still up about 15% on a year-to-date basis.
Taiwan Semi continues to demonstrate exceptional performance in the semiconductor industry, with Q2 revenue surging 44% year-over-year to $30 billion, driven largely by increasing AI chip demand. High-performance computing now represents 60% of the company’s sales, highlighting TSMC’s crucial role in the AI infrastructure boom. The company’s technological leadership remains unchallenged, particularly in advanced chip manufacturing processes at 3nm and 5nm nodes, while competitors Intel (INTC) and Samsung struggle with yield challenges.
TSMC’s global expansion strategy is marked by significant investments, including a substantial $165 billion commitment to establish six advanced wafer fabs and two packaging facilities in Arizona. The company has already begun production at its first Kumamoto facility in Japan with promising yields, demonstrating successful geographical diversification. However, these overseas expansion efforts are expected to impact gross margins, with a projected 2-3% contraction in 2025.
Recent developments have introduced some uncertainty regarding U.S. government equity stakes in CHIPS Act recipients, with TSMC reportedly considering returning their $6.6 billion in subsidies to maintain independence.
