Is TSMC really worth buying the dip? On-chain data provides the answer.

Recently, discussions about AI concept stocks on major exchanges cannot avoid TSMC. What kind of magic does this Taiwanese chip manufacturing giant possess?

In simple terms: 70% of the world's high-end chips come from this company. Apple, Nvidia, AMD, Qualcomm… the industry's top players are all its clients.

Data Speaks

According to a forecast by Grand View Research, the AI chip market is expected to expand at a compound annual growth rate of 29%, potentially reaching a market size of $323 billion by 2030. The entire semiconductor industry is projected to grow from the current $789 billion to $1.3 trillion.

How does TSMC benefit? Just look at the financial report for the first three quarters of 2025 - revenue of $89.3 billion, a year-on-year increase of 36%. Behind this is the explosive orders from chip design giants like Nvidia and AMD.

But there is a detail to note: although income grew by 36%, the growth rate of comprehensive income was only 30%. Costs are rising, and there is considerable pressure on capacity expansion.

How to view the valuation aspect

TSMC's stock price has risen by more than 50% over the past year, which sounds impressive. However, from a valuation perspective, the PE ratio is only 29, lower than the 5-year average of 25… Wait, this data seems a bit counterintuitive.

The key issue is geopolitical risk. The concentration of chip production capacity in Taiwan is what investors are most worried about. Even Buffett has reduced his holdings because of this.

However, from another perspective, there is no alternative globally. The United States, Japan, and South Korea are all desperately expanding production, but in the short term, no one can shake TSMC's monopoly position. China needs its chips, and the United States needs its production capacity… This “chokehold” has become a moat instead.

Bottom Line

The demand for AI computing power is still growing exponentially, and TSMC is the only company capable of mass-producing the most advanced chips. Its valuation is indeed cheap compared to its customers (Apple's PE is around 30, while Nvidia's PE is much higher). Geopolitical risks have already been priced in.

If you are optimistic about the AI hardware wave, TSMC is indeed an unavoidable target.