TSMC has caught Trump's attention.

Author | Fan Liang

Editor | Zhang Fan

Since 2025, under the triple positive factors of frequent good news for computing power chips, the expected increase in iPhone 17 sales, and the start of mass production of 2 - nanometer process, TSMC's stock price has continuously reached new highs, with an accumulated increase of over 50% this year, and its market value has exceeded the $1.5 trillion mark.

The biggest boost comes from the strong growth of performance. The latest financial report data shows that in the third quarter of 2025, TSMC's revenue growth rate increased by 30.3% year - on - year, exceeding Bloomberg's consensus expectation by 2.8 percentage points. The net profit margin was 45.7%, exceeding Bloomberg's consensus expectation by 3.6 percentage points, and the corresponding net profit amount exceeded Bloomberg's consensus expectation by 10%.

However, while the stock price is soaring, the market seems to selectively ignore a potential long - term risk of TSMC, that is, the impact of Intel. Previously, the article "After Trump's "nationalization", Intel = the US version of SMIC" pointed out that Intel has become a key support object under Trump's "Made in America" strategy.

In recent years, due to strategic mistakes such as delaying the use of EUV technology, Intel has lagged behind TSMC in the layout of advanced processes. For example, TSMC began to use EUV technology for large - scale mass production since 2019, while Intel didn't start to follow up until 2023. During this period, TSMC received a large number of external orders, and its revenue continued to grow, while Intel's revenue continued to decline.

However, in 2025, there have been marginal changes. First, Intel's 18A process, which is comparable to TSMC's 2nm process, will start mass production in the second half of 2025. Second, the US government intends to support Intel's chip foundry business.

So, can Intel pose a threat to TSMC? Has the market ignored TSMC's peer - to - peer competition risk?

Policy risks intensify

From the perspective of chip process planning, TSMC has a complete process portfolio from 3nm to 7nm and above, and its 2nm process is expected to be mass - produced in the second half of 2025. On Intel's side, its Intel 3/4/7 and other processes have become mature, and the Intel 18A process, as a key node, is also scheduled to start mass production in the second half of 2025.

In comparison, Intel's 18A process is similar to TSMC's 2nm process, and the two companies will compete head - on in advanced processes. However, considering that TSMC has had a large number of external customer orders in the past and has accumulated stable cooperation relationships and production experience with external customers, TSMC naturally has a high advantage. According to TSMC's disclosure, in the third quarter of 2025, the proportion of advanced processes below 7nm in its total revenue reached 74%.

Figure: Comparison of chip processes between TSMC and Intel. Source: Bocom International, compiled by 36Kr

However, a series of support policies from the US government for domestic chip foundries, as well as the news of Intel's cooperation with NVIDIA and the rumors of its cooperation with Apple, AMD, and even TSMC, may break TSMC's leading advantage. In terms of data, the US chip manufacturing demand accounts for 57% of the global total, but its chip manufacturing capacity only accounts for about 10% of the global total. There is a large gap between domestic supply and demand. Therefore, the US government has an urgent need to develop domestic semiconductor manufacturing, and its policies are also centered around supporting domestic industries.

Figure: Proportion of US chip manufacturing demand and chip manufacturing capacity in the global total. Source: Yole, Moody's, compiled by 36Kr

According to Guancha.cn, the US "Wall Street Journal" exclusively reported on September 26 that the Trump administration is brewing a new policy, requiring chip companies to keep a 1:1 ratio between the number of chips produced in the US and the amount of imports. Companies that fail to meet the standard and do not obtain exemptions will face high tariffs.

Therefore, TSMC first needs to deal with the potential policy risk of the "1:1 ratio of domestic production to imports in the US".

To cope with potential policy pressure, TSMC has repeatedly announced large - scale investments in the US, including investing $65 billion to build three wafer fabs and an additional $100 billion for building three new wafer fabs, two packaging plants, and a research and development center. According to Bocom International statistics, among the $65 billion investment commitment, TSMC's first - phase 4nm factory in the US was put into operation at the end of 2024, and the second - phase 3/2nm factory and the third - phase 2/1.6nm factory will be put into operation around 2027 and 2030 respectively. In addition, among the new $100 billion investment commitment, about 70% of TSMC's funds will be used to build wafer fabs, mainly for processes below 2 nanometers, and it will take about 10 years.

The forecast data of Bocom International shows that the production capacity of TSMC's 3nm process chips can reach 400,000 - 500,000 wafers per month (equivalent to 12 - inch) by the end of 2026, and its 3nm production capacity in the US accounts for about 5%. The production capacity of 2nm process chips can reach 200,000 wafers per month by the end of 2026, and TSMC's US factory has not been put into operation at this time. Even from a longer - term perspective, according to TSMC's management forecast, TSMC's 2 - nanometer production capacity in the US may account for 30% of its total 2 - nanometer production capacity.

Considering that the North American market contributed 70% of TSMC's total revenue in 2024, assuming this proportion remains stable, even if 30% of the future 2nm production capacity in the US is all supplied to US customers, there is still about 40% of the demand relying on imports. At this time, the ratio of domestic production to imports of 2nm products is 3:4, which still has a large gap with the rumored 1:1 domestic production requirement. Once the relevant policy becomes a reality, TSMC will face great compliance pressure and may be forced to make passive adjustments in pricing, production capacity allocation, etc.

Figure: TSMC's production capacity planning. Source: Bocom International, compiled by 36Kr

The potential competitive landscape is also deteriorating

In addition to policy risks, TSMC needs to deal with the potential possibility of chip design manufacturers such as NVIDIA cooperating with Intel for foundry services.

After the cooperation with NVIDIA was officially finalized, there have been successive rumors of Intel's cooperation with chip design manufacturers such as Apple and AMD. As an IDM manufacturer, Intel's strategic intention to expand its wafer foundry business is very clear when it seeks cooperation with other chip design companies.

According to Counterpoint Research data, under the broad category of TSMC's "Wafer Foundry 2.0", TSMC's global market share was 35.3% in the first quarter of 2025, firmly ranking first in the industry, while Intel ranked second with a 6.5% share. Although the share gap is large, Intel is one of the few manufacturers that can pose a challenge in the advanced process field.

Therefore, although TSMC has significant advantages in market scale and mass - production experience, from a long - term perspective, if the leading domestic chip design giants in the US intend to support Intel as a "second - tier supplier" for the sake of supply chain diversification, Intel may still reshape its position as a strong competitor to TSMC. For example, the latest rumor shows that Microsoft has placed a wafer foundry order for its next - generation AI chip Maia 2 with Intel, planning to use the 18A or 18A - P process. This chip will be used in AI infrastructure such as Microsoft's Azure data centers.

Moreover, in addition to the potential competitive threat from Intel, Samsung has actively launched a price war in chip foundry services.

According to the "Caixin Express" in Taiwan, China, TSMC's 2 - nanometer wafer foundry price is 10% to 20% higher than the quote for the 3 - nanometer process, about $30,000 per wafer. At the same time, TSMC has also clearly stated that it will comprehensively adjust the prices of advanced processes such as 3nm, 4nm, 5nm, and 7nm next year, and the increase will be maintained in the single - digit percentage range.

Meanwhile, many media have reported that Samsung has reduced the price of its 2 - nanometer wafers to $20,000 per wafer, which is a 33% reduction compared with TSMC's expected price of $30,000. According to the report of Indian media Dataquest in mid - 2025, the yield rate of TSMC's 2nm process is about 60%, while that of Samsung is about 40%. Restricted by the yield rate, chip design companies that pursue the ultimate performance of chips and plan to launch strategic products will probably continue to choose to cooperate with TSMC. But for other cost - sensitive chip design companies, the significant reduction in Samsung's foundry price is undoubtedly very attractive. Samsung is targeting such customers, trying to improve the capacity utilization rate of its 2nm process through this approach.

Overall, whether it is Intel's return in advanced processes or Samsung's aggressive price war, although it is difficult to shake TSMC's financial performance in the short term, in the long run, the potential deterioration of the competitive landscape will continue to put pressure on the company. Therefore, for long - term investors, it is necessary to consider the evolution of the competitive landscape on the stock price.

Why has the capital market not shown an obvious reaction?

Although TSMC is facing the above - mentioned multiple negative impacts, the capital market has not shown an obvious reaction. The company's stock price even reached a record high on October 6. What is the reason for this?

Reviewing the changes in TSMC's price - to - earnings ratio (TTM), it can be found that since 2019, the market has mainly traded around the semiconductor industry cycle and TSMC's short - term performance:

From 2019 to the first quarter of 2022, TSMC experienced an obvious valuation increase stage, and the central value of the price - to - earnings ratio increased from 15 times to 30 times. This stage corresponds exactly to the upward cycle of the semiconductor industry after the epidemic. TSMC's net profit increased from NT$354 billion in 2019 to NT$993.295 billion in 2022, and the company achieved a double - click of performance and valuation.

From the second quarter of 2022 to the second quarter of 2023, the price - to - earnings ratio returned to the central value of 15 times. The reason is that the valuation was affected by both profit growth and stock price correction, and the company's profit also declined during this period, corresponding to the downward stage of the global semiconductor industry.

From the second quarter of 2023 to the present, driven by the boost of AI to computing power chips, the global semiconductor industry has entered a boom cycle again. TSMC's net profit increased by 36% year - on - year in 2024 and 60% year - on - year in the first half of 2025. Against the background of continuous performance growth, TSMC has achieved a double - click of performance and valuation again, and the central value of its valuation has increased from 15 times to over 30 times.

Therefore, although TSMC faces negative factors such as intensifying competition in the long term, in the short term, TSMC undoubtedly has quite remarkable performance release, which is an important factor for the market to give TSMC a high valuation.

Figure: TSMC's PE - band. Source: Wind, compiled by 36Kr

However, it should be noted that TSMC's price - to - earnings ratio has currently reached the 90th percentile in the past 10 years.

Compared with the previous valuation increase cycle (2019 - 2022), TSMC's net profit increased by about 180% and its revenue increased by about 100%. Based on the revenue and performance in 2023, at the current valuation, according to Wind's consensus forecast data, TSMC needs to wait until 2027 to achieve the same growth.

This means that buying TSMC at the current high - valuation level will lead to the situation of "buying based on short - term logic and waiting for long - term performance release", and from a long - term perspective, the company also faces the potential risk of a deteriorating competitive landscape. In summary, at the current valuation, even if TSMC's short - term performance is continuously exceeding expectations, its investment cost - effectiveness has significantly decreased.

*Disclaimer:

The content of this article only represents the author's views.

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