# Taiwan Semiconductor (TSM)



## james4beach (Nov 15, 2012)

Taiwan Semiconductor or TSMC is a chip maker based in Taiwan, but it trades as TSM in the US.

I searched the forum but did not find a single mention of this. The trailing 15 year return is 16.3% CAGR compared to just 8.8% for the S&P 500, so it's been a strong outperformer. Market cap is $368 billion, bigger than Intel and AMD _combined_.

TSMC has some of the best technology for producing cutting edge chips / ICs / CPUs / processors. There are many chip companies around the world which are "fabless", meaning that they don't have their own manufacturing (fab) facilities. Instead, these fabless companies will design the chip and then outsource the fabrication work to TSMC. With their huge size, TSMC is able to now invest significantly in their own R&D to keep improving the chemical and electrical processes to make better chips.

For example, AMD (the CPU maker) is fabless. They design the chips but don't make them. I believe that AMD has their chips made at both TSMC and GlobalFoundries.

Interesting news came out today when Intel released earnings. Intel is one of the last remaining US companies which actually has its own fab facilities (I've toured them in Oregon). They are now considering going fabless. People have suspected this for a while, but the announcement was still shocking. TSM rallied on the news.

Does anyone hold this?


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## james4beach (Nov 15, 2012)

Here's a chart of TSM versus the QQQ index since 2000. They have a pretty high correlation until 2009. However it looks like TSM has performed significantly better than the US tech sector since then.

TSM fell 86% during the last tech crash, about the same as QQQ.


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## james4beach (Nov 15, 2012)

This thing continues to be incredibly strong. Amazing performer.

15 year return is 19.6% CAGR
10 year return is 26.4% CAGR
5 year return is 45% CAGR

What a beast of a stock. I don't own it because I feel that I already have enough tech exposure, and buying this would also put me above the 100K threshold for T1135.


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## MrMatt (Dec 21, 2011)

TSMC is one of the the biggest chipmakers, and a contract fab for almost everyone.


Depending what numbers you look at, you need to remember Samsung makes a lot of Memory.

Memory and processors are different. I've made an absolute killing on Micron (MU).


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## Gumball (Dec 22, 2011)

Without getting too political - do you guys think the very real risk of China exerting their force over Taiwan (as they are currently doing on Hong Kong) could be detrimental to this stock?


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## MrMatt (Dec 21, 2011)

Gumball said:


> Without getting too political - do you guys think the very real risk of China exerting their force over Taiwan (as they are currently doing on Hong Kong) could be detrimental to this stock?


The legal status of Taiwan is in dispute.

The legal status of Hong Kong is not. 

I think the risks of China exerting their influence can't be overstated.
Sure short term, maybe not, but medium-long, their influence will be substantial.


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