If you're getting your shopping list ready for the anticipated end of interest rate hikes and, perhaps, a new bull market, chip stocks are a reasonable place to look for robust growth. To that end, investors may choose to expand their geographic horizons and consider a share position in semiconductor manufacturing giant Taiwan Semiconductor Manufacturing (TSM 1.26%).

With a market share of 55.5% in 2022, Taiwan Semiconductor is the undisputed heavyweight champion of the global semiconductor foundry industry. Yet, even a champion can't win every round and Taiwan Semiconductor finally had an ostensibly "bad" quarter in 2023.

Still, the company's quarterly stats had some bright spots and the market's disappointment is probably already reflected in Taiwan Semiconductor's share price and valuation, which is quite reasonable now. Besides, with its multinational ambitions, Taiwan Semiconductor looks unstoppable irrespective of short-term stock traders' concerns.

The drawdown in Taiwan Semiconductor stock is a gift

After a sizable rally, Taiwan Semiconductor stock corrected to the downside from mid-June through mid-August. This should be viewed as a normal asset price gyration; after all, even so-called growth stocks can't just grow continuously.

Even when there are periods of sideways consolidation or moderate drawdown, long-term investors can relax and collect Taiwan Semiconductor's quarterly dividend distributions. Notably, Taiwan Semiconductor's forward annual dividend yield of 1.45% easily surpasses the sector average yield of 1.025%.

Beyond normal consolidation (i.e., "taking a breather" after a share price run-up), Taiwan Semiconductor stock's drawdown can be attributed to the market's negative reaction to the company's second-quarter earnings report. Overeager traders were disappointed to learn in July that Taiwan Semiconductor is actually fallible, with the company's second-quarter 2023 revenue decreasing 10% year over year and its net income declining 23.3%.

On the other hand, Taiwan Semiconductor maintained its stellar track record of earnings beats with quarterly earnings per share (EPS) of $1.13, which surpassed Wall Street's call for $1.07. 

Still, the highly efficient market priced its disappointment and worry into the Taiwan Semiconductor share price, and the company's generally accepted accounting principles (GAAP) trailing-12-month P/E ratio of 14.5 (compared to the sector median P/E ratio of 25.8) suggests that a relative bargain may be afoot.

Combining value and yield with growth

Investors who anticipate an imminent bull market can certainly take note of Taiwan Semiconductor's comparative value and decent dividend yield, but should also focus on growth-oriented businesses. And judging from Taiwan Semiconductor's ambitious expansion plans, it's safe to say that this is a chipmaker with strong growth potential.

This doesn't mean Taiwan Semiconductor's growth will happen immediately. The company's shareholders will have to be patient as production at Taiwan Semiconductor's first U.S. plant, located in Arizona, has been pushed forward to 2025 due to a lack of local skilled workers.

But again, the market is efficient and Taiwan Semiconductor's Arizona plant delay is priced in. As Goldman Sachs analysts wrote in a research note, "We believe the U.S. expansion delay is also well expected by investors."

In any event, it's encouraging that Taiwan Semiconductor is willing to "play ball" and fully comply with local and federal regulations in establishing the Arizona factory. 

At the same time, even while Taiwan Semiconductor CEO C.C. Wei acknowledges that the company has "been building a lot of production lines around the world," he assures that it "is determined to remain rooted in Taiwan."

Yet, there's no denying that Taiwan Semiconductor's ambitions are global in scope. Along with production plants in the U.S. and Japan, Taiwan Semiconductor plans to build a factory in Germany, the government of which is expected to contribute as much as 5 billion euros to that factory. 

The point here is that, even if the Arizona plant's timeline has been delayed, it will come online and so will other Taiwan Semiconductor fabrication factories in multiple geographies.

So, there's an argument to be made that Taiwan Semiconductor stock could rebound in the long term and investors can accumulate dividend payouts while they wait. Therefore, a position today while the market is still worried about future outcomes and challenges might make you very happy in 2024 and 2025.