Picks-and-shovels of smart tech and Internet of Things
Taiwan Semiconductor (TSMC) is a core holding across FSSA’s Asia Pacific portfolios and we have been shareholders for many years. We believe it is still by far one of the best ways to capture the rising trend of artificial intelligence, smart devices and the Internet of Things (IoT) in a more connected and automated world.
Established in 1987, TSMC is a dedicated semiconductor foundry (manufacturer). TSMC was the pioneer of the foundry model, which separated semiconductor chip designs (produced by fabless companies) from the fabrication or manufacturing process (outsourced to a foundry). Over the last 30 years, foundries have gained market share from traditional integrated design and manufacturing chip companies. There were two main reasons for this: on the manufacturing side, the process has become more complicated and capital intensive; while on the customer side, more fabless (e.g. Nvidia) and system companies (e.g. Apple) have emerged.
TSMC has become the world’s largest dedicated contract chip manufacturer, with more than 50% market share. Growth has remained strong due to its advanced technology and strategy of being ‘everyone’s foundry’; that is, partnering with instead of competing with its customers. As long as semiconductor demand continues to grow – which we believe likely with devices becoming more complex and requiring increasingly powerful processors – TSMC should continue to thrive.
Source: Bloomberg, FactSet, FSSA Investment Managers, as at 31 December 2020. All figures in Taiwan Dollars.
Disclaimer: Reference to specific securities (if any) is included for the purpose of illustration only and should not be construed as a recommendation to buy or sell the same. All securities mentioned herein may or may not form part of the holdings of FSSA Investment Managers' portfolios at a certain point in time, and the holdings may change over time.