TIVP024: TSMC (TSM): THE MOST IMPORTANT BUSINESS IN THE WORLD?

W/ DANIEL MAHNCKE & SHAWN O’MALLEY

15 June 2025

Daniel Mahncke and Shawn O’Malley turn their focus to Taiwan Semiconductor Manufacturing Company (ticker: TSM) — the quiet engine powering nearly every device we touch and the global AI boom. Pioneering the pure-play foundry model, TSMC went from a government-backed experiment in the late 1980s to controlling more than 90 % of the world’s leading-edge chip production, fabricating Apple’s A- and M-series processors, Nvidia’s AI GPUs, and virtually every 3nm part on the planet.

In this episode, you’ll learn how Morris Chang’s radical bet rewired the semiconductor industry, why extreme scale and EUV mastery give TSMC a moat rival chipmakers can’t cross, how its Arizona and Japan fabs fit into a strategy shaped by China-Taiwan tension, and how wafer volumes, node mix, and multi-billion-dollar capex translate into free-cash-flow and ROIIC. Daniel and Shawn also debate the right way to price the ever-present geopolitical “wipe-out” tail risk, and ask whether today’s market price offers a margin of safety on what could be the most important company in the world.

Prefer to watch? Click ⁠⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠⁠⁠⁠ to watch this episode on YouTube.

SUBSCRIBE

IN THIS EPISODE, YOU’LL LEARN:

  • How TSMC evolved from a government-backed project to a trillion-dollar company 07:45 – How the semiconductor industry works
  • Where TSMC’s dominance comes from
  • What moat protects TSMC’s business
  • What the competitive landscape looks like
  • Where future growth is coming from
  • How geopolitical risk is impacting TSMC
  • Whether TSMC is attractively valued at its current levels
  • Whether Shawn & Daniel add TSM to The Intrinsic Value Portfolio
  • And much, much more!

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:00] Daniel Mahncke: One of the reasons why TSMC is the semiconductor giant today is Chang’s decision to go against the conventional wisdom. Because at the time, every major semiconductor company was vertically integrated, and that means they designed, manufactured and packaged chips in-house. So they did everything, all leading companies operated that model, but Chang envisioned something different, which was a company that wouldn’t design chips at all, and instead it would only manufacture chips on behalf of other companies.

[00:00:34] Daniel Mahncke: That’s basically the first pure play foundry. And again, it all sounds simple in retrospect because it worked out so well, but it was revolutionary back then because the idea of just outsourcing your most valuable intellectual property, which was your chip design to a third party manufacturer, was just insane.

[00:01:00] Shawn O’Malley: Welcome back folks to our Intrinsic Value Podcast, where we go through the business breakdowns of different companies every week, estimate their intrinsic value, and then decide whether to add them to our portfolio of stock holdings that we’re building over time. Slowly but surely. And before we get started, I do have a quick announcement in case you haven’t listened to some of our episodes recently.

[00:01:23] Shawn O’Malley: Daniel and I are really excited to announce that we are launching a new community for investors and our audience to join. This will be an exclusive community where we vet every member and cap the total size of the community. To basically ensure that it stays at a meaningful and intimate size so that everybody can know each other and, and share ideas.

[00:01:43] Shawn O’Malley: And for a limited time, we are opening up 30 spots. So if you want to join, and that sounds interesting to you, we have a wait list at theinvestorspodcast.com/intrinsicvaluecommunity. And yeah, spots are gonna fill up quick, so I would jump on over that as soon as you listen to this. For the applicants if admitted, you’ll have the chance to network with other like-minded investors, share stock ideas and get feedback on pitches, dial into calls with expert guest speakers, and also just get the latest updates on Daniel and I’s portfolio of investments and, and really so much more.

[00:02:19] Shawn O’Malley: So I think it’s gonna be really special. And like I said, if you wanna learn more about it and join the wait list for one of those limited spots, just go to the investors podcast.com/intrinsic value community. And we’ll also have a link in the description for this episode below. So with that. Let’s get into our episode today on what might just be the most important company in the world, and that is really not hyperbole.

HELP US OUT!

Help us reach new listeners by leaving us a rating and review on Spotify! It takes less than 30 seconds and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it!

BOOKS AND RESOURCES

NEW TO THE SHOW?

SPONSORS

Support our free podcast by supporting our ⁠⁠⁠sponsors⁠⁠⁠:

CONNECT WITH SHAWN

CONNECT WITH DANIEL

PROMOTIONS

Check out our latest offer for all The Investor’s Podcast Network listeners!

MI + TIVP Promotions

The Intrinsic Value Newsletter