This Hidden Growth Story in Taiwan Semi Could Cause TSM Stock to Skyrocket

Taiwan Semiconductor (TSM) is the leading chip manufacturer in the world. The company has some of the top chip designers, like Apple (AAPL), AMD (AMD), and Nvidia (NVDA), as its customers. The reason for this is simple: it makes the most advanced semiconductor chips in the world, a lead so significant in the global economy that it finds itself as the major talking point when it comes to U.S.-China rivalry. It is this technological lead that has helped its stock more than double over the last twelve months, but I believe the potential is much bigger than this. The company’s financials do not paint a true picture of the business, and some recent developments merit a more qualitative approach to identifying the opportunity that this company presents.

A few days ago, you might have heard about TSMC raising the pricing on its 3nm process nodes by 15%. The move shows how the company enjoys pricing power and is willing to use that leverage to improve its revenue. Most of the impact of this move is likely to directly trickle down to the bottom line, improving the company’s earnings prospects. But the real consequences of this move will be seen somewhere else, and the market may not yet have woken up to that.