Needless to say, 2025 hasn't been the best year for most big tech stocks, with many of them down significantly through April 29. This can be attributed to a few things: inflated valuations (much of it coming from artificial intelligence hype), macroeconomic factors, and the newly announced tariffs from the Trump administration that could disrupt supply chains and increase prices.
Shares of semiconductor giant Taiwan Semiconductor Manufacturing (TSM +1.40%) haven't been immune to the slump, either, down 18%. However, the positive news is that the stock's current price point is much more intriguing for investors interested in buying the dip.
TSMC won't be affected too much by tariffs
Initially, imports from Taiwan were slated to receive a 32% tariff. The percentage has since dropped to 10%, but in either case the chipmaker (TSMC for short) was in a good position because semiconductors were exempt from the new tariffs. That's music to TSMC's ears because semiconductors account for all of its revenue, and exports to North America (mostly the U.S.) account for 77% of its total revenue.
NYSE: TSM
Key Data Points
Below are a few major U.S. clients who rely on its core products and what they are used for:
- Apple: iPhones, iPads, Macs
- Nvidia: Graphic processing units (GPUs), AI accelerators
- Advanced Micro Devices: GPUs, central processing units (CPUs)
- Qualcomm: Internet-of-things (IOT) devices, smartphone processors
With so many of these U.S. tech companies relying on TSMC, the tariff exemption ensures that their supply chains remains relatively stable and don't disrupt the production of crucial devices. That can't be said for many other tech imports.
It's becoming a legitimate cash cow
TSMC isn't just a semiconductor manufacturer; it's essentially the semiconductor manufacturer, with a stronghold on advanced chipmaking. That's why it has attracted and retained top-tier clients that have kept money flowing in.
In the first quarter, it made $25.5 billion in revenue, up 35% year over year. Its net income growth was more impressive, up 60% year over year to nearly $11 billion. Both of these highlight the momentum behind the business, especially over the past five years.
TSM Revenue (Quarterly) data by YCharts.
TSMC has a major competitive advantage: It's the only company that produces advanced semiconductors on such a large scale. That's why it has become the go-to for many leading tech companies. If you're looking for a way to sustain financial success, that's it.
TSMC is the foundation of the AI ecosystem
You probably don't think of TSMC when you think of AI companies because it manufactures semiconductors. But it is just as important to the AI ecosystem as any other company. It doesn't train AI applications, it doesn't develop AI software, and it doesn't design AI hardware. What it does, however, is provide the advanced semiconductors that make all of those things possible. To see how, let's work in reverse.
For consumer-facing AI applications like OpenAI's ChatGPT and Alphabet's Gemini to be effective, they need advanced chips for training using trillions of data points. To store this data, you need data centers because they provide the necessary infrastructure. For these data centers to function efficiently, you need high-end GPUs. And at the very bottom, those GPUs are powered by TSMC's semiconductors.
So without the chipmaker, AI would be noticeably less advanced.
Investors can expect consistent income from TSMC
TSMC's stock has experienced significant growth over the past five years, up nearly 220% (as of April 29). This has been so impressive that its dividend often flies under the radar. It's payout isn't eye-popping by any means, but its current 1.5% yield is higher than the S&P 500 average.
TSM Dividend Yield data by YCharts.
There's a lot of uncertainty in the market right now, especially with tech stocks. You can't predict how prices will move, but you can count on TSMC's dividend being consistent. Its shares may be in a slump right now, but if you're a long-term investor, buying the dip could prove to be a lucrative two-for-one over the long haul. You get a stock that has shown high growth potential, as well as one with consistent dividend payouts.
