Jeremy Bowman, The Motley Fool

Sun, Jun 22, 2025, 3:23 AM4 min read

• TSMC is one of the most dominant tech companies in the world.

• It's the world's largest manufacturer of semiconductors.

• The company is delivering strong growth and wide profit margins.

• 10 stocks we like better than Taiwan Semiconductor Manufacturing ›

Taiwan Semiconductor Manufacturing (NYSE: TSM) is one of the most valuable companies in the world at a market cap of $1.1 trillion, but it doesn't get the same level of attention that other big tech stocks get like Nvidia or Microsoft do.

Still, TSMC's competitive advantages can go toe to toe with any other stock, whether it's in the "Magnificent Seven" or not. On that note, let's take a look at 10 reasons to buy and hold this stock forever.

TSMC is the clear leader in semiconductor manufacturing with roughly 67% market share, and an even higher share of advanced chips, estimated at roughly 90%. With that level of market share, TSMC has pricing power, and its customers have limited alternatives.

The company has gained that market share over time, and it's unlikely to erode anytime soon.

TSMC is in a great competitive position not just because of its dominant market share, but it's also benefiting from tremendous in its industry due to the growth of artificial intelligence (AI) and technology more broadly. That's a major reason why revenue jumped 42% in the first quarter, and future innovations should continue to drive chip demand.

TSMC dominates the chip foundry industry in part because it was the first company to employ the third-party foundry model when it was founded in 1987. Over the years, that model has prevailed over the traditional integrated model.

TSMC's collection of customers helps show why the company is so dominant. Among its top customers are Apple, Nvidia, AMD, and Broadcom, cutting-edge chip-design companies and some of the most innovative companies in technology.

Profit margin is one of the clearest indicators of competitive advantage, and TSMC shines in that category. In the first quarter, the company reported an operating margin of 49%, showing it has pricing power and economies of scale.

TSMC is not only a dominant company in its own right, but its services are in such high demand as semiconductors are crucial for the global economy.

As part of the CHIPS Act, TSMC is receiving $6.6 billion in subsidies, and it's received $2 billion from the Chinese and Japanese governments in recent years.