TSMCWide moat

TSMC runs the simplest great business in technology: it manufactures the chips that everyone else merely designs, and charges by the wafer. Apple designs an iPhone processor, Nvidia an AI accelerator, AMD a server CPU, a hyperscaler its custom silicon — and nearly all of it funnels into the same Taiwanese fabs, because nobody else can make the leading edge at scale. In 2025 that toll produced US$122.4 billion of revenue, up 36%, with $55.2 billion of net income at a 59.9% gross margin¹ — extraordinary economics for a manufacturer, and ordinary ones for a monopoly-adjacent utility.

The mix tells you what the world is building. High-performance computing — the AI platforms above all — supplied $71 billion, or 58% of 2025 revenue, having overtaken the smartphone ($35.7 billion) that built the company; IoT, automotive and consumer electronics split the remainder. The shift keeps accelerating: by the second quarter of 2026 — a record $40.2 billion at a 67.7% gross margin — HPC and AI were about two-thirds of everything TSMC ships².

The genius of the model is what TSMC does not do: it designs no chips of its own and competes with no customer, which is why bitter rivals — Apple and Qualcomm, Nvidia and AMD and the hyperscalers building Nvidia alternatives — all manufacture under the same roof. The customers fund the arms race too: staying ahead costs $60-64 billion of capital spending this year alone³, recycled from the margins the process lead commands.

Whether the lead endures — the node roadmap, the yield machine, the pure- play trust, the switching costs that hold the world's chip designs in place — is the moat question, taken up wall by wall in The Moat below. The concentrated risks (an island, a cycle) live in the threats; the market's arguments in the insights; and the wagers on the next decade — the angstrom nodes, the American gigafab, the packaging chokepoint, silicon photonics — under Future Bets. How revenue divides by end market, and which lines are growing, is set out line by line in The Revenue Lines.