Key Facts on TSMC and ASML’s Semiconductor Dominance
Taiwan Semiconductor Manufacturing Company (NYSE: TSM) and ASML (NASDAQ: ASML) are critical players in the semiconductor industry. TSMC holds a virtual monopoly on advanced logic chip manufacturing, while ASML monopolizes the machines necessary for chip production. As of the second quarter of 2023, TSMC experienced a 34% revenue increase and gross margins rose to 67.6%. In contrast, ASML’s revenue grew by 21% with gross margins at 54%.
Both companies are expanding their capacity to meet the surging demand for advanced chips necessary for AI applications. TSMC plans to ramp up capital expenditures to accommodate future growth, while ASML is set to increase its capacity by 30% this year and again in 2027. TSMC is currently trading at a forward price-to-earnings (P/E) ratio of 19, suggesting it is undervalued in light of its growth prospects, compared to ASML’s forward P/E of 30.5.
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