BAMCO, Inc. on Taiwan Semiconductor Manufacturing Company Limited
Thesis
Baron views TSMC as the world's leading semiconductor foundry with a near monopoly in manufacturing the most advanced chips. Robust AI demand is supporting demand for advanced nodes even while the broader foundry market remains sluggish. Strong customer interest in the N2 process provides an additional growth driver, with management expecting N2 revenue to exceed N3 and carry a better margin profile. Baron believes TSMC's technology leadership, reliability and customer service position the company for years of continued growth.
“TSMC's undisputed market dominance and stellar reputation, combined with rapidly growing global demand for advanced chips, position the company for years of continued growth.”
Key risks
- Broader semiconductor foundry demand remains sluggish
- Semiconductor industry cyclicality and competition