Just in case anyone is interested, I wanted to review my decision 3 months in to check I’m still happy with this - not advice.
On EUV capacity
TSMC should have received / installed 50 of ASML’s EUV machines by the end of 2021 with Samsung expected to lag behind at 25.
台積電EUV機台採購破50台 美光DRAM EUV評估可望提前 (need to translate)
If ASML’s production capacity is as expected for 2020 and 2021 this means TSMC should retain its dominant position in small feature sizes because there simply wont be enough capacity going anywhere else.
If EUV lithography is going to be pretty much essential for any advanced process going onwards this advantage should be almost insurmountable in the near term.
On new N3 and N2 process
So while it looks like we can expect TSMC to retain the advantage on feature sizes, there is a potential bump in 2022 when they will still be using FinFET while Samsung will have moved to GAA transistors. It will be interesting to see if Samsung (and its customers) can capitalise on their GAA advantage before TSMC’s N2 node arrives in 2023 which is expected to be using GAA transistors.
Review
My biggest concerns at this point are unchanged:
- Political risk
- Global downturn in semiconductor demand
- Natural disaster
- Samsung’s lead in GAA transistors
I am now also a bit worried that TSMC is getting very expensive with a market cap of ~$400bn and a trailing p/e of ~25, hopefully it can grow into that valuation. On balance I’m happy to to hold TSMC despite the significant increase in price, it feels somewhat justified.