TSMC Strengthens Its Grip on the Global Semiconductor Foundry Market

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Taiwan Semiconductor Manufacturing Company (TSMC) is significantly widening its lead in the contract chipmaking sector. Recent data and substantial capital commitments underscore the firm's growing dominance, even as it navigates the challenges of operating at near-maximum capacity.

Research from Counterpoint Research reveals TSMC's commanding position reached a new peak in the third quarter of 2025. The company captured a staggering 72% of the worldwide foundry market. Its revenue surged by 41% year-over-year, dramatically outpacing the overall market growth of 17%, which brought the total market size to $84.8 billion.

The gap to its closest rivals continues to expand. Samsung holds a distant second place with an 11.5% market share, followed by SMIC at 5.7%. Collectively, TSMC's competitors saw revenue growth of just 6%, meaning the Taiwanese giant is expanding at a rate seven times faster.

This lead is powered by its most advanced manufacturing nodes. Chips produced using processes below 7 nanometers accounted for three-quarters of TSMC's revenue. The 5-nanometer process was the largest contributor at 37% of sales, while the cutting-edge 3-nanometer technology already represents 23%. Major clients like Nvidia, AMD, and Broadcom are driving relentless demand, particularly for processors designed for artificial intelligence applications.

A Multi-Billion Dollar Bet on Future Capacity

To sustain this momentum, TSMC's board greenlit substantial new investments totaling approximately $15.1 billion in November alone. This capital is earmarked across several critical areas:

• $7.3 billion for equipment to manufacture state-of-the-art semiconductors.
• $3.6 billion allocated to research and development initiatives.
• $3.0 billion for real estate and leased facility infrastructure.
• $1.2 billion to boost advanced packaging and specialty technology capabilities.

Concurrently, the company secured favorable long-term financing, issuing bonds worth NT$23.5 billion. The three tranches, with maturities extending to 2035, carry coupons between 1.50% and 1.58%, reflecting strong investor confidence in TSMC's creditworthiness.

Investor Confidence and Analyst Outlook

Despite a share price decline of 3.38% in the preceding week, shareholder ranks swelled by nearly 32,000 to reach 1.88 million—the highest level since April 2025. Retail investors were particularly active in accumulating shares.

Market analysts remain bullish on the stock's prospects. Bernstein raised its price target from $290 to $330, while Bank of America Securities reaffirmed its "Buy" rating with a target of $390. The company's operational performance supports this optimism; November revenue reached NT$343.61 billion, a 24.5% increase from the same month last year. Year-to-date growth stands at 32.8%.

Navigating Capacity Constraints

The breakneck demand is not without its complications. TSMC's production lines for 3nm, 4nm, and 5nm chips, along with its advanced CoWoS packaging technology, are operating at near-total utilization. Industry observers warn that physical capacity bottlenecks could emerge as early as 2026.

The recently approved multi-billion dollar investments are a direct response to this challenge. However, extended lead times for semiconductor manufacturing equipment pose a significant hurdle. The pace at which TSMC can successfully bring new production capacity online will be the decisive factor in determining whether its current growth trajectory can be maintained.