TSMC doesn't sell its own chips — it manufactures the chips that Apple, Nvidia, and other companies design, on contract, at a scale and precision no one else can match.
How TSMC makes money
TSMC sells no branded products of its own. Fabless companies like Apple, Nvidia, and AMD send it chip designs and pay a manufacturing fee; TSMC's fabs in Taiwan, the U.S., and Japan turn those designs into physical chips using 3nm and 5nm ultra-fine processes, producing more than 17 million wafers a year. Customers then sell the finished products — AI servers, smartphones, cars — and place more orders, often with upfront prepayment.
(design only)
3nm/5nm processes
more orders + prepayment
TSMC sells no branded chips of its own — manufacturing only, on contract. This is the "foundry" model. Source: 20-F FY2025, p.1.
Where the revenue comes from
Revenue by platform — 2025
In 2023, this split was 43% HPC vs. 38% smartphone — HPC has pulled further ahead every year since. Source: 20-F FY2025, p.20.
| Region | Share |
|---|---|
| North America | 75% |
| Asia-Pacific | 9% |
| China | 9% |
| Japan | 4% |
| EMEA | 3% |
Source: 20-F FY2025, p.17.
Customers and competitors
TSMC's customer base is B2B and concentrated: the top 10 customers accounted for 78% of revenue in 2025, up from 70% in 2023. The #1 customer's share fell from 25% (2023) to 19% (2025) while the #2 customer's share rose from 11% to 17% — a shift consistent with market reports that Nvidia overtook Apple as TSMC's largest customer around 2025 (customer names aren't disclosed in filings).
- Samsung Foundry — the only other company attempting sub-3nm mass production, but reportedly trailing TSMC on yield.
- Intel Foundry — pivoting from internal-only manufacturing toward external customers with its 18A process.
- UMC, GlobalFoundries, and others — compete only in mature nodes (28nm and above), not in leading-edge manufacturing.
Source: 20-F FY2025, p.8 (customer concentration); competitor detail reflects broadly known industry context, not company disclosure.
The metric that matters most in this sector
Foundries can keep selling older process nodes for years, so revenue and profit alone can mask a slowdown in technology leadership. The share of revenue coming from leading-edge (7nm or smaller) chips is the clearest read on whether TSMC is actually staying ahead.
| 2023 | 2024 | 2025 |
|---|---|---|
| 58% | 69% | 74% |
The 2025 figure breaks down as 3nm (24%) + 5nm (36%) + 7nm (14%).
Source: 20-F FY2025, p.27.
Leadership and ownership
C.C. Wei has been CEO since 2018 and added the Chairman role in June 2024, having joined the company in 1998. He holds a PhD in electrical engineering from Yale. Founder Morris Chang fully retired in 2018 and is no longer involved in management. The largest shareholder is Taiwan's government-backed National Development Fund, at 6.38%; all directors and officers combined hold just 0.23%.
Source: 20-F FY2025, p.38, p.55 (as of Feb 28, 2026).
Capital returns
The quarterly dividend rose from NT$5.00 to NT$6.00 in the second half of 2025, a 20% increase — but the dividend yield is still just 0.78% at current prices, since TSMC prioritizes reinvestment over shareholder payouts. The payout ratio has actually been falling — 34.3% (2023) → 31.4% (2024) → 27.5% (2025) — as profit grows faster than the dividend. Buybacks are negligible: NT$3.1 billion in 2025, under 0.2% of NT$1.7 trillion in net income.
Source: 20-F FY2025, p.9 (dividends); payout ratio calculated from cash flow statement, p.F-11–F-12.
How this company could fail
- Geopolitical concentration — core production facilities and most employees are based in Taiwan, directly exposed to shifting U.S. tariff and export-control policy (Section 232 investigations, tariff negotiations).
- Customer concentration — the top 10 customers are 78% of revenue, with the largest single customer at 19%. A shift in orders from a handful of major fabless customers can move results significantly.
- The rising cost of staying ahead — 2026 capex guidance was sharply raised to $60–64B. If AI demand disappoints, the fixed-cost and depreciation burden from that spending falls straight onto margins.
Source: 20-F FY2025, p.4–5 (geopolitical risk), p.8 (customer concentration); Q2 FY2026 earnings call for capex guidance.
Five-year financials
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| Revenue | 1,587 | 2,264 | 2,162 | 2,894 | 3,809 |
| YoY growth | — | +42.6% | -4.5% | +33.9% | +31.6% |
| Operating income (margin) | 650 | 1,121 | 921 | 1,322 | 1,936 (50.8%) |
| Net income | 593 | 993 | 851 | 1,158 | 1,695 |
| Operating cash flow | 1,112 | 1,611 | 1,242 | 1,826 | 2,275 |
| Capex | 839 | 1,083 | 950 | 956 | 1,272 |
| Free cash flow | 273 | 528 | 292 | 870 | 1,003 |
Source: 20-F FY2025, p.F-6, p.F-10–F-11; 20-F FY2023, p.F-5 (2021–2022 comparatives). 2023 was the only down year, driven by a broad semiconductor down-cycle.
What we still don't know
- The actual yield and customer adoption pace of the 2nm (N2) process isn't disclosed here — the next earnings call is the place to check.
- How much more expensive overseas fabs (like those in Arizona) are compared to Taiwan production isn't broken out, since there's no segment-level disclosure by geography.
- Specific contingency plans if Taiwan Strait tensions escalate (whether or how quickly production could shift to other fabs) aren't disclosed in filings.
Frequently asked questions
What does TSMC do?
TSMC doesn't sell its own chips — it manufactures the chips that Apple, Nvidia, and other companies design, on contract, as the world's largest dedicated chip foundry.
What is TSMC's market cap?
As of this article's data, TSMC's market cap was about $1.93 trillion, with a P/E ratio of roughly 27.8x.
How much of TSMC revenue comes from leading-edge chips?
About 74% of revenue comes from leading-edge process nodes (7nm and smaller) — the most advanced, highest-value manufacturing TSMC does.