Taiwan Semiconductor Manufacturing Company: Profile

Quick Facts / Company Snapshot

• Establishment Year: 1987
• Headquarters: Hsinchu Science Park, Taiwan
• Business Model: Dedicated pure-play semiconductor foundry
• Foundry 2.0 Market Share: 34% (2024)
• Total Consolidated Revenue: NT$2,894.31 billion (US$90.08 billion)
• Net Profit Margin: 40.5%
• Operating Profit Margin: 45.7%
• Gross Profit Margin: 56.1%
• Diluted Earnings Per Share (EPS): NT$45.25
• Annual Production Capacity: 12.9 million 12-inch equivalent wafers shipped (2024)
• Advanced Node Revenue (7nm and below): 69% of total wafer revenue
• R&D Investment: US$6.361 billion (7.1% of revenue)
• Total Employees: 83,825 worldwide
• Sustainability Goal: Net Zero Emissions by 2050
• Dividend Payout: NT$14.0 per share (2024)

Company Overview

The foundational vision of the organization is to serve as the most advanced and largest technology and foundry services provider to fabless companies and Integrated Device Manufacturers (IDMs). By establishing the pure-play foundry model, the company created a paradigm shift in the semiconductor industry, focusing exclusively on manufacturing products for its customers without designing or marketing any products under its own name. This ensures a non-competitive relationship where the company’s success is directly tethered to the success of its clients.

The mission is to remain the trusted technology and capacity provider of the global logic integrated circuit (IC) industry for years to come. This is supported by a “trinity of strengths” comprising technology leadership, manufacturing leadership, and being the most reputable, service-oriented foundry. The operational philosophy is rooted in core values of integrity, commitment, innovation, and customer trust. Integrity is identified as the most vital value, emphasizing truthfulness, the fulfillment of commitments, and a complete rejection of corrupt behavior or politicking.

• The company serves as the world’s most reliable and effective capacity provider, playing an integral role in the global semiconductor ecosystem.
• Manufacturing operations focus on large-scale interconnectivity, lower power consumption, and affordable costs for global innovators.

Business Segments and Revenue Breakup %

Operational performance is categorized into major platforms that reflect the end-market applications of the semiconductor technologies manufactured.

High Performance Computing (HPC): 51% of Net Revenue

This segment represents the largest portion of the business, driven by the massive expansion of artificial intelligence (AI) and data center infrastructure. It includes processors for servers, AI accelerators, and complex computing hardware that requires extreme energy efficiency and processing power.

Smartphones: 35% of Net Revenue

The smartphone segment remains a core driver, utilizing the most advanced technology nodes to power mobile processors and modems. While the broader consumer market saw a mild recovery, demand for leading-edge logic in flagship devices remained robust.

Internet of Things (IoT): 6% of Net Revenue

This platform focuses on connected devices, wearables, and smart home technologies. The focus here is often on ultra-low power designs and specialty technologies that allow for long battery life and integrated connectivity.

Automotive: 5% of Net Revenue

The automotive segment is a strategic focus area, especially with the transition toward autonomous driving and electric vehicles. Manufacturing includes specialty technology solutions for advanced driver-assistance systems (ADAS) and infotainment.

Digital Consumer Electronics (DCE): 1% of Net Revenue

This segment covers smart TVs, gaming consoles, and other home entertainment systems. Recovery in this market is expected to be gradual as macroeconomic conditions stabilize.

Others: 2% of Net Revenue

This includes various smaller niche markets and legacy applications not covered by the primary platforms.

History and Evolution

Established in 1987 in Hsinchu Science Park, the company pioneered the dedicated foundry model. This innovation allowed the semiconductor industry to decouple chip design from the capital-intensive manufacturing process. Over nearly four decades, the company has evolved from a local manufacturing firm into a global technology linchpin.

The evolution is marked by a consistent march toward smaller and more efficient technology nodes. In 2024, the company saw the second year of volume production for its industry-leading 3-nanometer (N3) technology. The journey from 7nm to 5nm and now N3 demonstrates a history of meeting the “insatiable need” for energy-efficient computing. The introduction of “Foundry 2.0” in 2024 redefined the industry scope to include logic wafer manufacturing, packaging, testing, and mask-making, reflecting a broader service portfolio.

• The company manufactured 11,878 products for 522 customers using 288 distinct process technologies in 2024.
• A major strategic milestone was reached in late 2024 as overseas facilities in the United States and Japan entered volume production.

Products and Services with Revenue Breakup %

The product portfolio is defined by technology nodes, which represent the sophistication and density of the semiconductors produced.

• 3-Nanometer (N3): 18% of total wafer revenue. This node is the current leading edge in volume production, utilized primarily by HPC and smartphone leaders.
• 5-Nanometer (N5): 34% of total wafer revenue. This node serves as a mature yet advanced high-volume platform for a wide range of premium applications.
• 7-Nanometer (N7): 17% of total wafer revenue.
• Advanced Technologies (7nm and beyond): 69% of total wafer revenue. This aggregate figure highlights the company’s shift toward high-margin, cutting-edge silicon.

The service offering extends beyond wafer fabrication to include Advanced Packaging and 3D chip stacking technologies. These include CoWoS (Chip on Wafer on Substrate), InFO (Integrated Fan-Out), and TSMC-SOIC (System on Integrated Chips). These technologies enable large-scale interconnectivity and are critical for high-bandwidth AI applications.

Brand Portfolio with Revenue %

The organization operates under a unified corporate brand, focusing on pure-play foundry services. It does not market its own IC products to avoid competition with its customers. All revenue is derived from foundry services and related backend services. Under the Foundry 2.0 definition, the company’s output value includes:

• Logic Wafer Manufacturing
• Advanced Packaging and Testing
• Mask-making

In 2024, these combined services resulted in a 34% share of the Foundry 2.0 industry value.

Geographical Presence and Region-Wise Revenue %

The company maintains a vast global footprint, with revenue generated across all major technology hubs. Revenue is classified by the headquarters location of the customer.

• North America: 70% of net revenue
• China: 11% of net revenue
• Asia Pacific (excluding China and Japan): 10% of net revenue
• Japan: 5% of net revenue
• EMEA (Europe, Middle East, and Africa): 4% of net revenue

Manufacturing and Office Footprint:

The physical infrastructure is expanding to provide “geographic flexibility” for customers:

• Taiwan: The primary hub with GIGAFAB® facilities (Fab 12, 14, 15, 18), advanced backend fabs, and four 8-inch fabs.
• United States: TSMC Arizona (Fab 21) entered high-volume production of 4nm technology in Q4 2024. TSMC Washington (8-inch fab) and research centers in San Jose.
• Japan: JASM in Kumamoto began volume production of specialty technologies at the end of 2024.
• China: 12-inch fab in Nanjing (TSMC Nanjing) and an 8-inch fab in Shanghai (TSMC China).
• Germany: Ground was broken in Dresden in August 2024 for a specialty technology fab (ESMC) focusing on automotive and industrial applications.

Financial Performance Analysis

2024 was characterized as an “outstanding year” with record highs in both revenue and earnings. The performance was driven primarily by robust AI-related demand and the successful ramp of 3-nanometer technologies.

• Total Consolidated Revenue reached NT$2,894.31 billion, a 33.9% increase over the previous year.
• In US dollar terms, revenue was US$90.08 billion, representing 30.0% growth.
• Net Income stood at NT$1,173.27 billion, representing a 39.9% increase compared to 2023.
• Total Wafer Shipments increased to 12.9 million 12-inch equivalent wafers, up from 12.0 million.

This growth significantly outperformed the broader foundry industry’s 6% expansion rate. The performance reflects the company’s ability to capture the majority of leading-edge demand, as evidenced by the fact that advanced technologies (7nm and below) now account for nearly 70% of all wafer revenue.

Profit and Loss Analysis

The company maintained high profitability despite the capital-intensive nature of transitioning to new technology nodes.

• Gross Profit: NT$1,624.35 billion with a 56.1% margin.
• Operating Profit: NT$1,322.99 billion with a 45.7% margin.
• Net Profit: NT$1,173.27 billion with a 40.5% margin.
• Operating Expenses: R&D expenditures amounted to US$6.361 billion (7.1% of revenue).
• Earnings Per Share (EPS): Diluted EPS reached NT$45.25, a 39.9% jump from the NT$32.34 recorded in 2023.

The increase in margins was supported by high capacity utilization and a favorable product mix heavily weighted toward advanced nodes. Management noted that the N3 technology represented 18% of total wafer revenue in its second year of production.

Balance Sheet Analysis

The financial position is robust, with significant liquidity to support massive ongoing capital investments.

• Total Assets: NT$6,691.94 billion (as of December 31, 2024).
• Current Assets: NT$3,088.35 billion, a 41% increase from the prior year.
• Cash and Cash Equivalents: NT$2,127.63 billion.
• Property, Plant, and Equipment: NT$3,234.98 billion (net).
• Total Equity: NT$4,323.58 billion.

The balance sheet reflects a disciplined approach to capital management, ensuring the company can self-fund a large portion of its expansion while maintaining a healthy return for shareholders.

Cash Flow Analysis

Cash generation remains a primary strength, allowing for a combination of high R&D spending, global fab construction, and increased dividends.

• Operating Cash Flow: NT$1,826.18 billion net cash was generated from operating activities.
• Investing Cash Flow: NT$864.84 billion used, primarily for capital expenditures in advanced technology capacity.
• Financing Cash Flow: NT$346.30 billion used, largely for cash dividend payments.
• Dividend Growth: Total cash dividends were raised to NT$14.0 per share in 2024, compared to NT$11.25 in 2023.

The company’s liquid position grew by over NT$662 billion during the year, ending with a cash balance of NT$2,127.63 billion.

Management Discussion & Analysis (MD&A)

Management views 2024 as a landmark year where AI became a primary and structural driver of demand. They observe that while consumer-facing segments like smartphones experienced a “mild recovery,” AI-related demand was “robust.” The structural demand for energy-efficient computing is accelerating as everything becomes more intelligent and connected.

Key management insights include:

• The AI Revolution: AI is moving from datacenters to PCs, smartphones, and IoT devices. This transition increases the value of the company’s technology platform.
• Geographic Flexibility: Expanding the global manufacturing footprint (USA, Japan, Germany) is a strategic move to meet customer needs and maximize shareholder value.
• Return on Investment: The company is achieving tangible ROI from its own internal use of AI and machine learning in fab operations and R&D.
• Overseas Yields: Early production in Arizona has shown yields comparable to Taiwan fabs, confirming the company’s ability to maintain manufacturing quality globally.

Board of Directors and Leadership Team

The governance structure is designed to provide diverse expertise and rigorous oversight.

Board of Directors:

The Board consists of ten directors, including seven independent directors.

• Dr. C.C. Wei: Chairman and Chief Executive Officer.
• Dr. F.C. Tseng: Director.
• Dr. Ming-Hsin Kung: Director (Representative of National Development Fund, Taiwan).
• Sir Peter L. Bonfield: Independent Director.
• Mr. Michael R. Splinter: Independent Director.
• Mr. Moshe N. Gavrielov: Independent Director.
• Dr. L. Rafael Reif: Independent Director.
• Ms. Ursula M. Burns: Independent Director.
• Ms. Lynn L. Elsenhans: Independent Director.
• Dr. Chuan Lin: Independent Director.

Leadership Committees:

• Audit and Risk Committee: Score of 4.79/5 in self-assessment.
• Compensation and People Development Committee: Score of 4.84/5.
• Nominating, Corporate Governance and Sustainability Committee: Score of 4.63/5.

Management Team:

• Executive VPs & Co-COOs: Mr. Y.P. Chyn and Dr. Y.J. Mii.
• Senior VPs & Deputy Co-COOs: Dr. Cliff Hou and Dr. Kevin Zhang.

Subsidiaries, Associates, and Joint Ventures

The company operates through a network of wholly-owned and majority-owned entities.

• TSMC North America: 100% ownership.
• TSMC Arizona Corporation: 100% ownership.
• TSMC Global Ltd.: 100% ownership (Capital injection of up to US$10 billion approved in early 2025).
• TSMC China / TSMC Nanjing: 100% ownership.
• VisEra Technologies: 72.65% ownership.
• JASM (Japan Advanced Semiconductor Manufacturing): Majority-owned specialty fab in Kumamoto.
• ESMC (European Semiconductor Manufacturing Company): 70% ownership; joint venture with Bosch, Infineon, and NXP.

Physical Properties

The company manages an extensive array of high-tech facilities across three continents.

• Corporate Headquarters: 8, Li-Hsin Rd. 6, Hsinchu Science Park, Taiwan.
• GIGAFAB® Facilities: Fab 12 (Hsinchu), Fab 14 (Tainan), Fab 15 (Taichung), and Fab 18 (Tainan).
• Overseas Plants: Fab 21 (Arizona, USA), JASM (Kumamoto, Japan), Fab 10 (Shanghai), Fab 11 (Camas, WA), and Fab 16 (Nanjing).
• Planned Properties: ESMC facility in Dresden, Germany.
• Advanced Backend Fabs: Several locations in Taiwan dedicated to CoWoS and InFO technologies.

Segment-wise Performance

• HPC (High Performance Computing): Grew substantially as the leading revenue contributor (51%), benefiting from the surge in generative AI applications.
• Smartphone: Maintained steady performance, transitioning customers to 3nm nodes.
• Mature Nodes: Continued to provide specialty technology solutions (e.g., for automotive) to create differentiation and long-lasting value.

Founders

The company was established in 1987. It pioneered the pure-play foundry business model, which was an entirely new concept at the time. This model was designed to enable the success of the global semiconductor industry by focusing on manufacturing excellence without competing with chip designers.

Shareholding Pattern

As of the 2024 reporting period, the ownership is widely distributed among institutional and public holders.

• ADR Holders (NYSE: TSM): 20.49%
• National Development Fund (Taiwan): 6.38%
• Government of Singapore: 2.63%
• Norges Bank: 1.78%
• Vanguard Total International Stock Index Fund: 1.30%

The company remains a favorite among global institutional investors due to its technology moat and consistent dividend growth.

Investments and Capital Expenditure Plans

The company maintains an aggressive investment posture to sustain its leadership.

• Capital Appropriations (Early 2025): Approximately US$17,141.40 million approved for advanced and specialty technology capacity, fab construction, and facility systems.
• R&D Focus: Spending reached US$6.361 billion (7.1% of revenue) in 2024.
• Future Tech: Investments are targeted at the development of 2nm (N2), A16, and A14 technologies.
• Expansion: Continuous investment in CoWoS and advanced backend capacities to resolve AI-related bottlenecks.

Future Strategy

The strategic focus is on maintaining a “Trinity of Strengths” to capture industry megatrends such as 5G, AI, and HPC.

• Technology Roadmap: Volume production of 2nm (N2) is on track for the second half of 2025.
• A16 Technology: Introduction of A16 featuring backside power delivery for HPC products is scheduled for volume production in the second half of 2026.
• Foundry 2.0: Expanding the total addressable market by integrating more backend and packaging services.
• Sustainability: Pursuit of “Net Zero by 2050” with intermediate milestones such as implementing carbon capture technology and sourcing renewable energy.

Competitive Landscape

The company operates in the highly competitive semiconductor foundry industry. While standard names like GlobalFoundries, Samsung Foundry, and Intel Foundry Services are active in the market, the company differentiates itself through its “pure-play” model.

• IDM Competition: The company aims to be “competitive with the leading IDMs” while serving them as customers.
• Differentiation: Success is based on being the most reputable and maximum-total-benefits silicon foundry, ensuring no competition with its own customers.

Key Strengths

• Technology Moat: Leading-edge volume production (3nm) and advanced nodes (7nm and below) accounting for 69% of revenue.
• Manufacturing Quality: Global yields (including Arizona and Japan) that are comparable to established Taiwan facilities.
• Financial Power: Record NT$1.17 trillion net income and NT$2.1 trillion in cash.
• Customer Trust: 522 customers across diverse platforms, with zero internal product competition.

Key Challenges and Risks

• Customer Concentration: The top ten customers accounted for 76% of net revenue in 2024.
• Cybersecurity: Risks of cyberattacks using AI-developed malicious codes or sophisticated phishing.
• Export Controls: Subject to trade policies, export control laws, and governmental regulations in multiple jurisdictions.
• Talent Recruitment: Fierce competition for skilled technical and professional personnel.
• Resource Management: Potential impacts from utility cost increases and environmental regulations.

Conclusion and Strategic Outlook

Entering 2025, the organization is poised for another year of healthy growth. The structural demand for energy-efficient computing is accelerating, with AI becoming a permanent fixture in datacenters, smartphones, and edge devices. With 2nm production on the horizon and a global manufacturing footprint nearing full realization, the company remains the indispensable backbone of the modern digital economy.

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Content is based on publicly available corporate filings, regulatory disclosures, annual reports, 10-K filings, Investor Relations materials, and direct mail communication with the company.