2024-08-05 06:30:00 ET
Taiwan Semiconductor Manufacturing (NYSE: TSM) is a controversial stock from certain points of view. The Taiwan-based foundry produces nearly all of the world's most advanced chips. Still, most of its production takes place in Taiwan. Because that island is in the middle of a geopolitical battle between the U.S. and China, many investors, including Warren Buffett, are leery of holding a direct stake in the company.
Given the need for TSMC's chips in both the U.S. and China, the likelihood of tensions resulting in an invasion of Taiwan is low. Nonetheless, escaping that reality is not as easy as some chip stock investors might imagine. For this reason, semiconductor investors should not only acknowledge their ties to the company but also consider a strategy that mitigates that risk.
Most chip stock investors invest in TSMC directly due to its industry role. The company manufactures the most advanced chips for most of the most prominent chip companies. This includes Apple , Nvidia , Advanced Micro Devices , Qualcomm , and Intel , which had to turn to TSMC despite its own extensive foundry capacity.
For further details see:
Why You May Be a Taiwan Semiconductor Stock Investor Without Even Knowing It