For investors, shares of Taiwan Semiconductor Manufacturing Company (TSM), the world’s leading contract chipmaker, still appear undervalued. Despite a strong performance in 2026, the stock trades at a price-to-earnings ratio of less than 27 times (based on forward earnings expectations). At the same time, analysts project that earnings per share will more than double between 2025 and 2028.
TSMC expects the semiconductor market to reach $1.5 trillion by 2030, roughly double the consumption value in 2025. This figure is also higher than the company’s previous forecast of just over $1 trillion by 2030. Against the current backdrop of surging spending, despite strong demand for many semiconductor companies, TSMC stands out as a long-term winner.
Few companies are as adept as TSMC at capitalizing on growing chip demand, especially for AI chips. The company not only possesses market-leading manufacturing processes but also offers advanced packaging capabilities, which are becoming increasingly important for efficient AI servers. More importantly, TSMC’s manufacturing capacity for the world’s most advanced chips exceeds that of all other companies combined.
TSMC updated its 2026 guidance when it released its first-quarter earnings and now expects full-year revenue growth to exceed 30%. However, the company anticipates even faster revenue growth for the entire semiconductor industry this year. This suggests that despite its industry-leading technology, TSMC may still lose some market share in 2026. This shortfall stems from the rapid rise in memory chip prices, a factor multiple hyperscalers have cited when raising their capital expenditure guidance. But as specialized memory chip manufacturers expand production capacity, prices are expected to stabilize, leading to a significant slowdown in future revenue growth. Meanwhile, TSMC maintains its long-term outlook of 25% average annual revenue growth between 2024 and 2029.
To meet demand, TSMC is also investing heavily. The company told investors that it expects full-year capital expenditures to approach the upper end of its previously guided range of $52 billion to $56 billion. Management also stated that spending over the next three years will increase significantly more than in the past few years to capture the big AI trend.
Within the $1.5 trillion market size forecast by TSMC, an estimated 55% ($825 billion) will be allocated to high-performance chips. In other words, by 2030, this market segment where TSMC holds a clear advantage will be larger than the entire semiconductor market today.
TSMC’s roadmap through 2029 shows that as this major trend unfolds, the company can sustain its current technology leadership. As the world’s largest contract chipmaker, TSMC benefits from a virtuous cycle: it generates more revenue than its competitors, enabling it to invest more in R&D to maintain technological leadership, which in turn keeps its major customers coming back year after year, giving the company the confidence to expand capacity to meet their demand for more chips.
In the coming years, TSMC aims to scale up its next-generation N2 process and make iterative improvements based on the A14 process, offering customers more powerful and energy-efficient technology transitions. Its advanced packaging capabilities will expand its ability to combine more logic chips with high-bandwidth memory and optical interconnects to maximize the potential of new AI chips. Increasing available memory and reducing data transmission delays between chips are among the biggest bottlenecks in AI training and inference today, and TSMC’s advanced packaging technology is precisely working to solve this problem.
