5 Largest Chip Producers In The World

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

Number of Hedge Fund Holders: 72

Market Cap: $533.22 billion

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the largest semiconductor foundry in the world, making chips for the biggest global tech companies. The Taiwanese firm is a pure-play foundry and is known as the ‘backbone’ of the semiconductor industry, as companies including Apple, Intel, Qualcomm and NVIDIA outsource their chip manufacturing to Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM).

In January, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) outlined plans to spend a record $40-$44 billion in capital expenditures for 2022, up from around $30 billion in 2021. This will further solidify its position as the largest foundry in the world. In 2021, TSMC saw its revenues generated by sales to Apple increase 20% year-on-year to reach $14.3 billion, approximately 26% of the firm’s total wafer revenue for the year. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) will also manufacture Apple’s new M1 Ultra SoC chip using a 5nm process node and advanced packaging technology. It supplies industry-leading 5 nano-metre chips to Apple, and is working on introducing a 3nm chip by 2023.

Automotive firms also outsource their chip manufacturing to Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and these orders are expected to rise at a faster-than-previously-predicted pace. TSMC’s dominant position in the market will see it attract orders for AI chips used in autonomous driving from companies such as Tesla, NVIDIA, Qualcomm, and Intel. In the 7/5nm foundry process segment, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has commanded a market share exceeding 90%.

L1 Capital, an investment firm, talked about Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its third quarter 2021 investor letter. Here’s what the fund said:

“Even though they are not majority State owned and we would expect many of China’s technology champions to continue to grow strongly, outcomes for shareholders may be unsatisfactory… The Fund has retained its investment in Taiwan Semiconductor Manufacturing Company (TSMC) which is well placed to maintain its global leadership in semiconductor manufacturing. Due to geopolitical risks, we limit the position size of TSMC in the Fund.”