While there are several quality chipmakers you can invest in, Taiwan Semiconductor Manufacturing (TSM 2.82%) is the largest. Known as TSMC, it has a 70% share of the global foundry market. Second-place Samsung has a 7% market share.
Like many artificial intelligence (AI) stocks, TSMC has pulled back recently, creating a good buying opportunity. If you've already invested or are considering doing so, here are a few of the most important things to know about this semiconductor company.
Image source: Taiwan Semiconductor Manufacturing.
1. Many of the biggest tech companies rely on TSMC
TSMC plays a crucial role in the technology market, as it manufactures chips for over 500 clients. Some of its top clients, in terms of how much they contribute to TSMC's revenue, are:
- Apple
- Nvidia
- Broadcom
- Qualcomm
- Advanced Micro Devices
All of them are leaders in the tech sector, and three are among the 20 largest companies by market cap (Apple, Nvidia, and Broadcom). TSMC's chips power everything from Apple's iPhones to Nvidia's graphics processing units (GPUs). Because clients are dependent on TSMC, it benefits from steady demand and pricing power.
2. 60% of its revenue comes from advanced chips
TSMC's most cutting-edge chips are accounting for a growing portion of its revenue. Research by The Motley Fool on how TSMC makes money found that 23% of its sales came from 3 nanometer (nm) chips, as of Q3 2025. These 3nm chips are the industry's most advanced, and as recently as Q2 2023, they made up no revenue for TSMC.
Another 37% of TSMC's revenue in Q3 2025 came from 5nm chips, which are also an advanced technology. Its revenue share from 7nm and larger chips has been steadily decreasing, a trend that should continue with the computing power needed for AI data centers.
As a result, TSMC has seen substantial growth in its revenue and profits. Revenue jumped 30.3% year over year to $33 billion in Q3, and net income was up 39% to $15 billion.
3. TSMC has been expanding operations
The bulk of TSMC's chip production happens in Taiwan, and while that probably won't change, it has been expanding its global footprint. It's building fabrication plants in the U.S., Japan, and Germany.
NYSE: TSM
Key Data Points
The U.S. production deal, in particular, is a massive undertaking. TSMC is investing a total of $165 billion to build six semiconductor wafer fabs, two advanced packaging facilities, and a research and development (R&D) team center in Arizona. TSMC calls it "the largest foreign direct investment in a greenfield project in American history." Global expansion puts TSMC closer to its largest clients, and the U.S. investment reportedly helped TSMC land an exemption from President Donald Trump's semiconductor tariffs.
TSMC stock has outperformed the market over the last five years, with returns of 213% compared to 92% for the S&P 500 index. Considering how important it is to so many tech companies, TSMC has a good chance of continuing to outperform over the next five years, as well.
