The wave of artificial intelligence (AI) has driven the rapid development of the semiconductor industry, and TSMC has also become the focus of market attention.
[Financial Channel/Comprehensive Report] The wave of artificial intelligence (AI) has driven the rapid development of the semiconductor industry, and TSMC and ASML have also become the focus of market attention. The two companies occupy key positions in the fields of wafer foundry and ultraviolet (EUV) lithography equipment respectively. However, foreign media analysis believes that both companies have strong competitive advantages, but TSMC is a relatively safe choice and is currently a more worthy investment target.
Foreign media "The Motley Fool" reported that both TSMC and ASML have strong competitive advantages, but their business models are different. In addition to paying attention to the company's technological leadership, investors should also pay attention to how much future growth expectations are reflected in the current stock price, and the impact that the company may face when the AI construction boom slows down.
The report pointed out that ASML has a special position in the field of semiconductor equipment and is the only company in the world that masters EUV manufacturing technology. This type of equipment is about the size of a school bus and costs hundreds of millions of dollars. It is mainly used by wafer foundries such as TSMC to help create extremely precise circuits on chips.
As wafer manufacturing processes continue to shrink, the importance of EUV equipment in advanced semiconductor manufacturing also increases. Since ASML is the only supplier of this key technology and has established an unshakable technical advantage, it will not be easy for competitors to break through its leading position.
In comparison, although TSMC is not the only wafer foundry in the world, it still maintains a strong market position due to its large production capacity, advanced process technology and cooperative relationships with customers.
The report quoted data and pointed out that TSMC accounted for approximately 72.5% of the global foundry industry revenue in the second quarter. Its scale advantage makes it difficult for other competitors to fully undertake orders from its customers. Even if a customer intends to transfer all orders, it may be limited by the production capacity of other manufacturers.
Foreign media believe that TSMC’s market position may still be challenged by competitors in the future, but currently no other player can match it in scale. Coupled with the fact that TSMC maintains good relations with its customers, the author of the report believes that TSMC’s industry dominance is unlikely to be easily broken in the next 10 years.
The report believes that although ASML's technology monopoly advantage is clearer, it does not mean that its stock is definitely more worthy of investment than TSMC. The key lies in the revenue models of the two companies and changes in future market demand.
ASML's business mainly relies on chip manufacturers to expand production capacity and purchase more equipment. Although the company can also continue to generate revenue through equipment maintenance and related services, reports indicate that the scale of this revenue is still far smaller than that of equipment sales.
Currently, global chip manufacturers are actively expanding production to cope with the chip demand driven by AI infrastructure, benefiting ASML. However, if the AI construction boom gradually comes to an end in the future, chip manufacturers may postpone production expansion, putting pressure on ASML's equipment sales.
In comparison, TSMC’s growth opportunities do not only come from current AI chip demand. The report pointed out that in the future, emerging technologies such as humanoid robots, physical artificial intelligence (Physical AI) and self-driving cars may also require a large number of chips. Even if the semiconductor industry's expansion slows down, these new applications may still bring demand to TSMC and support its long-term business scale.
In addition to demand prospects, stock price valuation is also the reason why foreign media believe that TSMC is relatively attractive.
The report pointed out that based on the estimated profit in 2026, ASML's price-to-earnings ratio is significantly higher than that of TSMC; if calculated based on the estimated profit in 2027, the valuation gap between the two still exists. In other words, investors need to pay a higher valuation to buy ASML shares, but there is still uncertainty about whether the company's long-term demand can continue to grow.
Foreign media believe that although a monopoly position can bring competitive advantages to companies, investors should also consider how much the company's operations and stock prices will be affected when the current wave of AI demand gradually recedes.
The author of the report therefore believes that TSMC not only has advanced process and scale advantages, but may also benefit from more emerging chip applications in the future. In addition, the current valuation is relatively low, so it is a semiconductor target with relatively low investment risk and worthy of long-term attention.
