Why TSMC Might Quietly Beat Nvidia Over the Next 3 Years

While everyone’s chasing Nvidia’s AI story, one company quietly manufactures every chip that makes the story possible — and takes a cut from every winner.

Ask most retail investors about semiconductors, and they’ll throw one name back: Nvidia.
Fair enough — it’s been the trade of the decade. The stock’s up 1,400% in three years, AI’s poster child, and the biggest company in the world by market cap.

But here’s what most miss: Nvidia doesn’t make its own chips.
It designs them — brilliant designs, no doubt — but the hard graft of building them? That’s done by someone else.

That someone is Taiwan Semiconductor Manufacturing Company, better known as TSMC.
Ticker TSM if you’re buying on the NYSE.

What It Actually Does

TSMC is the world’s leading chip foundry — the fabricator that manufactures chips for almost every major tech name you can think of. Nvidia, Apple, AMD, Qualcomm, Amazon, even Tesla — all of them send their designs to TSMC’s factories.

It’s the ultimate B2B operator — invisible to consumers, indispensable to the industry. Around 70% of the world’s advanced chip fabrication flows through TSMC. Its 3-nanometre and 5-nanometre processes sit at the bleeding edge of silicon tech. Smaller circuits mean faster, more efficient chips — and no one’s scaling them better.

In short: if AI is the new oil, TSMC is the refinery.

Why It Matters

Because every AI arms race needs hardware.
Whether Nvidia keeps its GPU crown or AMD, Intel, or Google muscle in — they’ll all need TSMC’s foundries to actually build their chips. It’s the “arms dealer” of the semiconductor world: doesn’t matter who wins the war, they all buy from the same shop.

TSMC’s model is also brutally efficient.
While Nvidia’s margins hinge on design wins and product cycles, TSMC runs a steady pipeline of contracts across multiple clients. Revenue is up 36% year-on-year, with monthly sales now hitting $10 billion consistently. Operating margins hover around 50% — industrial-grade profitability, not tech hype.

The Big Risk

You can’t talk about TSMC without mentioning Taiwan.
It’s the geopolitical elephant in the room — and yes, markets price that in. But TSMC isn’t standing still. It’s now investing $165 billion in new fabrication plants in Arizona, building six facilities that already produce Nvidia’s next-gen “Blackwell” chips.

That’s not PR; it’s de-risking. The company’s effectively creating a second TSMC in the West — to protect its clients, its supply chain, and its valuation from geopolitics.

The How — and the Edge

TSMC’s edge isn’t about hype; it’s about scale, precision, and irreplaceability.
Building one advanced fab can cost $20 billion and take five years. You can’t just “start another TSMC.” The barriers are absurdly high — capital, expertise, client trust, and decades of iteration.

That’s why even as the U.S., Japan, and Europe pour billions into local chip manufacturing, TSMC still leads on process nodes, yield, and reliability.
Nvidia’s success has made it rich; TSMC’s ecosystem has made it essential.

Kyri’s Take

If Nvidia is the show pony, TSMC is the stable that breeds them all.
And when the crowd moves on from AI headlines to earnings durability, the market will start rewarding the quiet compounders — the builders, not the storytellers.

TSMC might not be the loudest stock in your watchlist, but it’s the one the loud stocks rely on.
That’s leverage of a different kind.

⚖️ TSMC — Risk / Reward Snapshot (2025–2028 Outlook)

Factor	View	Kyri’s Note
Geopolitical Risk	🔴 High	Based in Taiwan — always under the China shadow. But that’s precisely why the U.S., Japan, and Europe are investing billions to anchor its supply chain westward.
Diversification & De-Risking	🟢 Improving Fast	$165B U.S. fab buildout in Arizona + Japan/Germany sites. By 2027, over 25% of advanced capacity expected offshore.
Earnings Growth	🟢 Strong & Sticky	Up ~36% YoY revenue; consistent $10B+ monthly turnover. Not cyclical hype — contractual manufacturing flow.
Market Position	🟢 Dominant	~70% global foundry share. Makes chips for everyone, including Nvidia, Apple, AMD, and Tesla. Practically irreplaceable.
Valuation	🟡 Attractive	Trades at a discount to Nvidia despite superior margins and diversification. Geopolitical discount keeps it reasonable.
Dividend & Financials	🟢 Rock Solid	Gross margin ~58%, operating margin ~50%. Small but steady dividend. Zero drama balance sheet.
Macro Exposure	🟡 Moderate	Sensitive to global chip cycles — but AI, EV, and data centre demand create a long runway through 2030.