Longhold

TSM

TSMC

The foundry of record for anyone who needs a leading-edge chip and does not own a competitive fab.

WideDecadeFullTech fluent
83
Longhold
88
Earnings
82
Moat
78
Hold

Ten-year thesis

TSMC is the compounding machine behind Apple, NVIDIA, AMD, and a long tail of fabless designers. Process leadership, yield, and trust with IP-sensitive customers are the moat. A decade hold assumes it keeps a node or more of lead and that Taiwan risk is a position-size question, not a pass. Earnings are cyclical with the semiconductor cycle; the share of global logic is not.

The moat

Scale in capex, process recipes, and customer lock-in at the node. Switching a flagship SoC to another foundry is a two-year product delay. Intel Foundry is the only serious attempt to contest; it has not won the trust game yet.

Switching costs90

Pain, risk, or retraining required to leave.

Network effects55

The product gets better as more people use it.

Intangibles & IP92

Patents, data, licenses, process knowledge, regulation.

Scale advantage94

Fixed costs spread over a volume rivals cannot match.

Cost advantage88

Structural ability to be the low-cost producer.

Brand74

Pricing power from trust, habit, or identity.

Tech overlay

Foundry is a scale-and-learning business. Each node funds the next. That is a cost and intangible moat, not a brand story. Geopolitics is the hold-score tax — underwrite it explicitly rather than pretending it is a footnote.

What can break it

  • Taiwan geopolitical shock
  • Hyperscaler custom silicon and Intel Foundry share gains
  • Capex cycle that compresses ROIC

Earnings path

USD billions, illustrative 2016–2025 series

Owner metrics

P/E

24.0×

P/FCF

28.0×

ROIC

26%

ROE

30%

FCF conversion

70%

Debt / equity

0.26

Gross margin

54%

Op. margin

43%

10y rev CAGR

14%

10y EPS CAGR

17%

Owner earnings

$32.0B

Mkt cap

$860B

Owner earnings yield 3.7%. Yield is judged against quality, not against a single hurdle — a fortress can be fairly priced at a lower yield than a fragile name.

FoundrySemiconductorsScale