QS Research · Michael Burry's Scion Capital analyst template · 2006
TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD (TSM)
As of 2026-11-06 · 11/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case +13% · downside -24% · upside +39%
The market is treating TSM as an AI-cycle casualty after a 23.5% drawdown from its 52-week high, but the operating record through 3Q26 is not deteriorating: EPS NT$29.43, gross margin 66.4%, operating margin 58.7%, 4Q26 revenue guidance of US$52.3-54.3B and FY2026 growth guided to 44%. At $373.06 and the source-quoted 23.8x forward P/E, TSM is not expensive for that growth, but it is not a deep-value bargain either; Section 13's 276.8x P/E and roughly -90% downside cases are stale FY2024 arithmetic and use a market cap that multiplies the ADS price by ordinary shares without the ADR ratio, so I do not use them. Using 23.8x to imply forward EPS of $15.68, my 27x base gives $423 (+13%), 18x downside gives $282 (-24%), and 33x upside gives $517 (+39%). The business quality—73% foundry share, HPC at 58% of FY2025 revenue, 2nm in volume production—argues against a short, but the price already discounts much of the growth and the rule is not met. Verdict: watch, not long, until either the multiple compresses toward the high-teens or forward earnings guidance proves durable through the capex step-up.
Key numbers
- Share price: $373.06
- Market cap: $9,674.39B
- Latest financial period: FY Dec 2024 to Dec 31, 2024
- Revenue (FY Dec 2024): TWD 2,894.31B
- P/E (FY Dec 2024): 276.8x
- Price / book: 75.54x
The 15 boxes
- ✓ 1. Long-form business notes
TSMC sells wafer fabrication to customers who bring their own chip designs, plus design, mask making, 3DFabric advanced packaging and testing, and it got far bigger and more HPC-concentrated between the two annual reports on file. FY2025 revenue was NT$3,809,054 million versus NT$1,339,255 million in FY2020, with High Performance Computing rising from 43% of revenue in FY2023 to 58% in FY2025 and North America rising from 62% of revenue in FY2020 to 75% in FY2025. The balance sheet funds a capex step-up: FY2025 capex of NT$1,272,411 million (US$40,895 million at NT$31.11) against 2026 guidance of US$52-56 billion, versus FY2020 capex of NT$507,239 million (US$17,235 million). Note the XBRL series stops at FY2024-12-31, so FY2025 income-statement and cash-flow detail beyond the Item 4 revenue figures is not in the sources.
- ✓ 2. Competitive advantage
The sources support a real but not absolute moat: the 20-F says TSMC competes on process technology, manufacturing excellence, customer trust and service quality, plus an ecosystem of fabs, engineers and suppliers that provides operational synergies and flexibility. FY2019-FY2024 data show the scale: revenue rose from TWD 1,069.99B to TWD 2,894.31B and operating income from TWD 372.70B to TWD 1,322.05B, with a FY2023 dip and FY2024 rebound. Competition is fierce from other foundries and integrated device manufacturers, some with more advanced or different technology or greater resources and subsidies, and fixed costs make margins cyclical. The provided sources contain no FY2025 or TTM financials, so current margins and returns cannot be quantified.
- ✓ 3. 10-Q takeaways
Q1 2026 (three months ended March 31, 2026) revenue was NT$1,134,103,440 thousand versus NT$839,253,664 thousand in Q1 2025, with gross profit at 66% of revenue versus 59% and operating income at NT$658,966,142 thousand, 58% of revenue, versus NT$407,080,808 thousand, 49%, in Q1 2025. Net income was NT$572,801,304 thousand versus NT$360,732,661 thousand and basic EPS NT$22.08 versus NT$13.95, but net income includes non-operating FX and other items. Operating cash flow was NT$698,976,265 thousand and cash ended Q1 2026 at NT$3,035,637,228 thousand; capex and inventory built, and the 6-K gives no management guidance or outlook.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ○ 9. Insider trading interpretation
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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