Understanding Dominance in the Semiconductor Industry

Daniel Mahncke and Shawn O’Malley turn their focus to Taiwan Semiconductor Manufacturing Company (ticker: TSM) — the quiet engine powering nearly every device we touch and the global AI boom. Pioneering the pure-play foundry model, TSMC went from a government-backed experiment in the late 1980s to controlling more than 90 % of the world’s leading-edge chip production, fabricating Apple’s A- and M-series processors, Nvidia’s AI GPUs, and virtually every 3nm part on the planet.

In this episode, you’ll learn how Morris Chang’s radical bet rewired the semiconductor industry, why extreme scale and EUV mastery give TSMC a moat rival chipmakers can’t cross, how its Arizona and Japan fabs fit into a strategy shaped by China-Taiwan tension, and how wafer volumes, node mix, and multi-billion-dollar capex translate into free-cash-flow and ROIIC. Daniel and Shawn also debate the right way to price the ever-present geopolitical “wipe-out” tail risk, and ask whether today’s market price offers a margin of safety on what could be the most important company in the world.

Prefer to watch? Click ⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠⁠⁠ to watch this episode on YouTube.

IN THIS EPISODE, YOU’LL LEARN

00:00 - Intro

07:39 - How TSMC evolved from a government-backed project to a trillion-dollar company 07:45 - How the semiconductor industry works

16:10 - Where TSMC’s dominance comes from

31:27 - What moat protects TSMC’s business

39:54 - What the competitive landscape looks like

43:55 - Where future growth is coming from

49:45 - How geopolitical risk is impacting TSMC

1:03:25 - Whether TSMC is attractively valued at its current levels

1:09:18 - Whether Shawn & Daniel add TSM to The Intrinsic Value Portfolio

And much, much more!

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

BOOKS AND RESOURCES

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• Interview with TSMC Founder Morris Chang
• Quartr’s Overview of TSMC
• NZS Semiconductor Whitepaper
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