TSMC: Chips, Money, and the Inevitable

AI Chip

So, the year 2025 happened. Artificial intelligence, that thing we all pretended wouldn’t change everything, did change everything. Stocks went up. Predictable, really. And 2026 is already shaping up to be… more of the same. Nvidia and Broadcom, those reliable giants, did well, naturally. But there was a quiet winner, a company building the very foundations of this digital frenzy. Taiwan Semiconductor Manufacturing, or TSM, as folks call it. They’re up 72% since the start of ’25. A good run. And it continues.

The Backbone, or Maybe Just Another Rib

TSMC makes the chips for almost everyone. It’s a simple arrangement. You need a brain for your robot, you call TSMC. They control about 72% of the market. A large number. Jensen Huang, the man from Nvidia, said they’re the best. He would, wouldn’t he? Still, it’s hard to argue with results. They’re not inventing the future, exactly. They’re just… enabling it. And charging handsomely for the privilege.

It’s a virtuous cycle, they say. Big customers come to TSMC. TSMC invests in better machines. Better machines attract even bigger customers. A beautiful, relentless spiral. It’s like watching a particularly efficient ant colony. No poetry, just… function. And profit.

The demand for these little silicon brains is, of course, driven by AI. Which means TSMC can raise prices. They did, at the start of the year, on chips that account for about three-quarters of their revenue. A bold move. They plan to keep raising them, annually, through 2029. It’s a good time to be in the chip-making business. A very good time. The next generation of chips will cost even more. Demand is high. What else would you expect?

They’re spending a lot of money to keep up. Between $52 and $56 billion in capital expenditures for 2026. A 32% increase. Depreciation will go up, naturally. But revenue is expected to grow even faster. They’re now projecting a five-year compound annual growth rate of 25%. A respectable number. After 36% growth in ’25. It’s all rather… predictable. They’ll keep growing, keep investing, keep taking our money. So it goes.

The stock trades at less than 24 times forward earnings. Which is… reasonable. Compared to Broadcom (41 times earnings) and Nvidia (32 times earnings), it’s almost a bargain. A temporary state, of course. Everything goes up eventually. Even the price of inevitability.

So, after a strong 2025, don’t expect a slowdown in 2026. TSMC has plenty of room to run. The machine will continue to churn. The chips will keep flowing. And we, the consumers, will continue to pay the price. It’s a simple story, really. A very simple story. And it’s likely to continue for some time. A long time, perhaps.

2026-01-31 21:22

The Backbone, or Maybe Just Another Rib

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