Shares of Taiwan Semiconductor Manufacturing Co. (TSM 4.96%) are up by roughly 54% in 2025 through Dec. 9. The company is experiencing exceptional demand for its cutting-edge process nodes and CoWoS (chip on wafer on substrate) packaging technology for manufacturing advanced chips for data centers, smartphones, and automobiles.
If you've paid off high-interest debt and have $1,000 not required for bills or contingencies or anything in the short term, then investing in this company can be a smart move now.
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A critical player in the global semiconductor ecosystem
TSMC's third-quarter fiscal 2025 earnings performance was impressive, fueled by the ongoing artificial intelligence (AI) boom. Revenue was up 40.8% year-over-year to $33.1 billion, while earnings per share rose 49.8% year-over-year to $2.91. The increasing demand for cutting-edge chips has driven advanced technologies (7-nanometer and below) to account for 74% of wafer revenue at the company. The company's 3-nanometer node alone accounted for 23% of the company's revenue, highlighting the increasing adoption of cutting-edge chips.
NYSE: TSM
Key Data Points
Management claimed that the AI-driven demand is so strong that its customers' customers are approaching it for foundry capacity. The explosive surge in token volumes, a metric that gauges the computational capacity required for AI training and inference workloads, is further driving demand for high-performance, energy-efficient chips.
TSMC is well-positioned to leverage this opportunity, given its technology roadmap. The company is also rapidly building advanced nodes and expanding advanced packaging capacity in the U.S., Japan, Germany, and Taiwan.
CoWoS packaging technology, used to integrate logic silicon with high-bandwidth memory in AI accelerators, is also severely supply constrained. However, analysts at Bernstein expect this bottleneck to prove a competitive advantage for TSMC, forecasting that its CoWoS capacity will reach 125,000 wafers per month by the end of 2026. This expansion, combined with contributions from outsourced semiconductor assembly and test providers, is expected to increase TSMC's capacity to 1.25 million wafers per year by 2026.
With robust profitability despite high capital expenditures, I think TSMC will prove to be a smart bet in December 2025.
