10 Best Semiconductor Stocks With The Highest Upside Potential

5. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Upside Potential: 43.17%

Market Capitalization: $747.18 Billion

Number of Hedge Fund Holders: 186

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world’s largest independent semiconductor foundry. It focuses solely on manufacturing semiconductor products for other companies. Unlike integrated device manufacturers (IDMs) like Intel or Samsung, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) doesn’t design its own chips. Instead, it produces chips for customers who provide their own designs. This allows the Taiwan-based company to focus purely on the manufacturing process and technology, ensuring high efficiency and quality.

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has established long-term partnerships with major tech companies including Apple and NVIDIA. These long-term relationships provide the company with a stable revenue stream. The high barriers for new entrants to compete in the foundry business give it a sustainable competitive advantage, allowing it to retain its leadership position in the foundry market.

The Taiwan-based company plans to invest an additional $100 billion in the US. This investment is intended to enhance AI chip production and diversify manufacturing locations. This move comes in response to increasing tariff threats from the US. TSMC’s colossal investment in Arizona seems to be a strategic move to mitigate potential risks and strengthen its position in the global semiconductor market.