TLDR
- TSMC’s Q4 revenue increased 26% with management projecting 30% growth for 2026
- Company forecasts 25% compound annual growth rate from 2024 through 2029
- Shares trade at 24 times forward earnings while tech sector averages 30x multiples
- Phoenix manufacturing facilities represent $165 billion investment in US production
- Taiwan pledges $250 billion for US semiconductor investments under new trade pact
Taiwan Semiconductor Manufacturing reported impressive fourth-quarter results and outlined a growth plan that extends well into the next decade. The earnings report confirms AI chip demand remains robust.
Taiwan Semiconductor Manufacturing Company Limited, TSM
The world’s largest contract chipmaker posted 26% revenue growth in Q4 compared to the prior year. Management projects revenue will increase 30% in 2026 as customers continue building AI infrastructure.
The growth projections don’t stop there. TSMC expects to achieve a 25% compound annual growth rate from 2024 through 2029. That forecast suggests the AI spending wave has years left to run.
TSMC manufactures chips for virtually every major player in artificial intelligence. The company supplies critical components to Nvidia, Apple, and numerous other firms developing AI hardware. When tech companies invest billions in computing power, TSMC captures a substantial portion of that spending.
Valuation Gap Creates Entry Point
The stock climbed more than 50% last year, but the current price doesn’t fully account for TSMC’s growth prospects. Shares trade at 24 times forward earnings.
Most large technology companies trade around 30 times forward earnings. Those businesses aren’t projecting anything close to 30% revenue growth this year.
The S&P 500 trades at 22.3 times forward earnings. TSMC trades slightly above that level but offers growth that dramatically exceeds the broader market.
The difference between TSMC’s valuation and its projected growth creates an attractive setup. Investors can buy a dominant industry leader with clear expansion catalysts at a price below comparable companies.
US Manufacturing Investment Accelerates
TSMC is building multiple chip production facilities in Phoenix with total investment reaching $165 billion. The project represents one of America’s largest manufacturing investments by a foreign company.
Taiwan President Lai Ching-te met with Arizona Senator Ruben Gallego to discuss expanding operations in the state. The conversation centered on adding manufacturing and research capabilities in the Phoenix region.
The discussion followed a new trade agreement between Taiwan and the United States. American tariffs on Taiwan exports fell to 15% from the previous 20% rate.
Taiwan committed to $250 billion in investments across semiconductors, energy, and artificial intelligence production in America. Another $250 billion in credit will support additional projects.
Senator Gallego called the current investment level impressive and said other states want similar commitments. The facilities will produce advanced chips needed for AI applications.
President Trump has encouraged chipmakers to expand domestic manufacturing, particularly for chips powering artificial intelligence systems. TSMC’s Arizona expansion aligns with that policy direction while meeting the company’s production needs.
Construction is already underway on multiple manufacturing plants that will create thousands of jobs. The facilities will produce some of the most sophisticated chips in the world.
Strong Fundamentals Support Investment Case
TSMC’s role as the leading chip foundry positions it to benefit from continued AI infrastructure spending. The company projects 30% revenue growth this year while trading at a discount to typical technology valuations.
The five-year outlook showing 25% annual growth through 2029 demonstrates management’s confidence in sustained demand. TSMC’s Arizona facilities ensure production capacity keeps pace with customer needs while deepening relationships in its largest market.
