Is Taiwan Semiconductor Stock a Buy Now?
Not many semiconductor companies manufacture their own chips anymore. Continually building and upgrading factories to keep up with the latest technology is an expensive proposition, to say the least. A single extreme ultraviolet (EUV) lithography machine, used to make the most advanced chips, costs as much as $200 million. The total cost of a new advanced semiconductor fabrication plant (fab) is measured in billions of dollars.
This prohibitive barrier to entry is the strongest argument for investing in semiconductor foundry leader Taiwan Semiconductor (NYSE: TSM). TSMC manufactures more than 50% of all chips made by foundries. The nearest competitor, Samsung, isn't even close.
Both Samsung and Intel are gunning for TSMC, but beyond those two chip companies, real competition is relegated to more mature manufacturing processes. No. 4 player GlobalFoundries, for example, stopped developing advanced 7nm manufacturing tech in 2018 to focus on existing manufacturing processes. Plenty of chips use older manufacturing tech, but the latest CPUs, GPUs, and other high-performance chips require bleeding-edge tech to push performance and efficiency to new heights.
Source Fool.com
