Taiwan Semiconductor Manufacturing (TSM 1.73%) (TSMC) might not be a household name like other major tech companies in the artificial intelligence (AI) space, but there's a strong case that it's one of the most important.
The backbone of AI isn't the software or fun apps that people use; it's the hardware (like advanced AI chips) that powers things like data centers that make training, deploying, and scaling AI possible. Companies like Nvidia, Advanced Micro Devices, Amazon, Alphabet, and others design these chips, but the vast majority are manufactured by TSMC.
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Over the next five years, spending on AI infrastructure is expected to surge, with many estimates reaching the trillions. To account for this, TSMC has committed to spending tens of billions of dollars per year to expand its capacity and meet demand.
NYSE: TSM
Key Data Points
The first step in the AI revolution
If you think of artificial intelligence as being a pipeline, with apps like ChatGPT and other generative AI tools being the end piece, then Taiwan Semiconductor is the very beginning that makes the ecosystem possible (or at least effective as it is now).
As major companies rush to build out data centers and improve their AI infrastructure, TSMC will undoubtedly be one of the biggest beneficiaries, snagging a piece of these companies' AI budgets as the cash trickles down to the companies that bring these AI chips to life. TSMC currently has a giant monopoly on manufacturing advanced AI chips.
