As artificial intelligence enters an ever-expanding range of industries, Nvidia (NVDA) is hailed as the king of AI. But Taiwan Semiconductor (TSM), also known as TSMC, stands as a major force behind this throne. And now both Nvidia and Taiwan Semi have created new buying points to extend and expand their dominance.
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Besides Nvidia, TSMC works with the biggest chip designers. Its partners include Advanced Micro Devices (AMD), Arm Holdings (ARM), Broadcom (AVGO), apple (AAPL), Marvell Technology (MRVL) and Qualcomm (QCOM).
Founded in 1987, TSMC created a foundry business model for the semiconductor industry, which included semiconductor fabrication plants and integrated circuit design operations.
Today, it operates in four major markets: smartphones, high-performance computing, automotive electronics and the Internet of Things, or IoT.
TSMC, Nvidia and Synopsys Drive AI Innovation
In March, TSMC and System Design Solutions Leaders Synopsys (SNPS) announced its move into production with Nvidia's computational lithography platform.
In the news release, Nvidia said the collaboration between the three firms will push the boundaries of physics for the next generation of advanced semiconductor chips.
Noting that computational lithography is a cornerstone of chip manufacturing, Nvidia founder and CEO Jensen Huang said his firm's partnerships with TSMC and Synopsys “open new frontiers for semiconductor scaling in accelerated computing and generative Applying AI.”
TSMC powers the next generation of AI
Last month, TSMC unveiled more innovations at the 2024 North America Technology Symposium. The company announced its latest semiconductor processes, advanced packaging, and other technologies to power the next generation of AI innovations.
“We are entering an AI-empowered world, where artificial intelligence runs not only in data centers but also in PCs, mobile devices, automobiles and even the Internet of Things,” said CEO CCV.
In April, TSMC also announced plans to build a third leading-edge fab in Arizona.
The company continues to complete its first fab as it builds a second at its Arizona subsidiary. The third fab brings TSMC's total capital spending for the Phoenix, Ariz., site to more than $65 billion. This is the largest foreign direct investment in a greenfield project in US history. (A greenfield project is built from scratch, with no infrastructure or systems in place.)
TSM stock looks to be breaking out along with Nvidia.
Nvidia has created a pattern with 974 buy points. With earnings on May 22, the stock rose above its 50-day moving average earlier this month and remains above it.
Taiwan Semiconductor stocks have formed a double bottom, a common chart pattern in choppy markets. Like Nvidia, TSMC is standing above its 50-day line. The semiconductor giant is trading about 5 percent below the 148.43 buy point.
Shortly after TSMC reported its Q1 earnings beat on April 18, it regained the 50-day line. After a series of quarters showing sluggish growth, TSMC reported an 11% increase in sales to $18.5 billion and a 4% increase in earnings to $1.36 per share.
Analysts see growth continuing, with 16 percent growth forecast to $6.12 per share in 2024. For next year, Wall Street expects a 25 percent increase to $7.63 a share.
Follow Matthew Galgani at X, first on Twitter, at @IBD_MGalgani.
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