Foreign media reported that both TSMC (2330) and NVIDIA were included in the "Top 10 Semiconductor Stocks Worth Buying in the Next 10 Years." However, foreign media analysis pointed out that although both companies have benefited from the growth in AI computing demand, their investment logics are quite different. What should investors do if the AI chip architecture changes in the future?
The American investment media "Insider Monkey" analyzed that investing in chip manufacturers may be able to diversify the risks of betting on a single technology, but it will also face another type of concentration risk. Huida sells computing platforms that integrate network equipment and software with its own chips as the core; TSMC is responsible for manufacturing chips designed by customers.
The report pointed out that although the two companies are both choices for the growth of AI, they play different roles in the semiconductor supply chain and cannot directly replace each other.
According to analysis, TSMC’s advantage lies in its ability to serve competing customers at the same time. As long as customers adopt TSMC’s processes, they can bring manufacturing revenue to TSMC. In the future, if the market gradually shifts to customized AI accelerators, even if some chip suppliers face competitive pressure, chip manufacturing demand may continue, and TSMC may also have the opportunity to undertake related orders.
However, this does not mean that TSMC will definitely be able to win all chip design orders. The actual degree of benefit still depends on which manufacturer customers choose to manufacture.
TSMC’s latest third-quarter financial report shows that advanced processes of 7 nanometers and below accounted for 79% of wafer revenue, of which 2 nanometer process products contributed 8%, reflecting the company’s continued advancement of advanced process technologies. However, to maintain its manufacturing advantage, TSMC must still ensure yield rates, stable delivery, and continue to invest huge amounts of money to expand production capacity.
In comparison, Huida's advantage lies in the chip itself, but also in the computing platform established by integrating the chip, network equipment and software. Even if other chips with more attractive specifications appear on the market, Huida will still be able to maintain customer demand with its complete ecosystem and system integration capabilities.
However, if customers gradually develop their own software and customized hardware and reduce their reliance on Huida's integrated platform, it may also weaken Huida's competitive advantages.
From the perspective of revenue structure, Huida relies heavily on AI infrastructure spending. Huida's latest quarterly revenue reached US$96.22 billion, of which data center revenue accounted for US$89 billion, accounting for approximately 92.5% of total revenue. This allows Huida to directly benefit from the AI data center construction boom, but if customers simultaneously reduce capital expenditures, it may also have an impact on the company.
TSMC's latest quarter operating profit margin reached 58.7%, demonstrating the profitability of its foundry business. However, even with a diverse customer base, TSMC still has to bear the geopolitical risks of where its fabs are located, as well as the problem of declining capacity utilization caused by falling demand.
In other words, although investing in TSMC has the opportunity to reduce reliance on a single chip design company, it does not mean that Taiwan's geopolitical risks can be completely avoided.
In terms of valuation, foreign media calculated based on the stock price on October 16 that Huida's equity value is approximately 41 times the cash flow after capital expenditures in the past 12 months; the equity value implied by TSMC's American Depositary Receipts (ADR) is approximately 47 times the relevant cash flow, and the calculation basis is that each unit of ADR represents 5 ordinary shares.
However, the report reminded that these multiples are affected by different investment cycles, and one cannot determine which company is cheaper based on numbers alone.
In addition, the number of hedge funds holding Huida stocks increased from 275 in the previous quarter to 285 in the second quarter of 2026; the number of hedge funds holding TSMC stocks increased from 234 to 249. Fisher also increased its holdings in Huida stock by 3% and TSMC stock by 2% respectively. As of September 30, the number of short-selling shares in Huida accounted for 1.35% of the outstanding shares.
Foreign media concluded that TSMC’s investment advantage lies in its ability to undertake the chip manufacturing needs of different customers and reduce its reliance on a single commercial chip architecture; Huida allows investors to more directly participate in the growth of integrated AI computing platforms.
Therefore, in addition to evaluating the long-term development of the AI industry, investors must also weigh corporate valuation, technological competition and geopolitical risks.
