TIVP024: TSMC (TSM): The Most Important Business in the World? w/ Daniel Mahncke & Shawn O’Malley

The Intrinsic Value Podcast - The Investor’s Podcast Network

The Investor's Podcast Network

Business, Education, Investing

4.6 • 592 Ratings

🗓️ 15 June 2025

⏱️ 92 minutes

🔗️ Recording | iTunes | RSS

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Summary

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. IN THIS EPISODE, YOU’LL LEARN 00:00 - Intro 07:39 - How TSMC evolved from a government-backed project to a trillion-dollar company 07:45 - How the semiconductor industry works 16:10 - Where TSMC’s dominance comes from 31:27 - What moat protects TSMC’s business 39:54 - What the competitive landscape looks like 43:55 - Where future growth is coming from 49:45 - How geopolitical risk is impacting TSMC 1:03:25 - Whether TSMC is attractively valued at its current levels 1:09:18 - Whether Shawn & Daniel add TSM to The Intrinsic Value Portfolio And much, much more! *Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences. BOOKS AND RESOURCES Get smarter about valuing businesses in just a few minutes each week through our newsletter, ⁠⁠⁠⁠⁠⁠⁠The Intrinsic Value Newsletter⁠⁠⁠⁠⁠⁠⁠. Sign Up for ⁠⁠The Intrinsic Value Community.⁠ Interview with TSMC Founder Morris Chang Quartr’s Overview of TSMC NZS Semiconductor Whitepaper Check out our previous Intrinsic Value breakdowns: ⁠⁠⁠⁠⁠⁠⁠Nintendo⁠⁠⁠⁠⁠⁠⁠, ⁠⁠⁠⁠⁠⁠⁠Airbnb⁠⁠⁠⁠⁠⁠⁠, ⁠⁠⁠⁠⁠⁠⁠AutoZone⁠⁠⁠⁠⁠⁠⁠, ⁠⁠⁠⁠⁠⁠⁠Alphabet⁠⁠⁠⁠⁠⁠⁠, ⁠⁠⁠⁠⁠⁠⁠Ulta⁠⁠⁠⁠⁠⁠⁠, ⁠⁠⁠⁠⁠⁠⁠John Deere⁠⁠⁠⁠⁠⁠⁠, and ⁠⁠⁠⁠⁠⁠⁠Madison Square Garden Sports⁠⁠⁠⁠⁠⁠⁠. Check out the books mentioned in the podcast ⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠⁠⁠. Enjoy ad-free episodes when you subscribe to our ⁠⁠⁠⁠⁠⁠⁠Premium Feed⁠⁠⁠⁠⁠⁠⁠. NEW TO THE SHOW? Follow our official social media accounts: ⁠⁠⁠⁠⁠⁠⁠X (Twitter)⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠LinkedIn⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠Instagram⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠Facebook⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠TikTok⁠⁠⁠⁠⁠⁠⁠. Browse through all our episodes (complete with transcripts) ⁠⁠⁠⁠⁠⁠⁠here⁠⁠⁠⁠⁠⁠⁠. Try Shawn's favorite tool for picking stock winners and managing our portfolios: ⁠⁠⁠⁠⁠⁠⁠TIP Finance⁠⁠⁠⁠⁠⁠⁠. Enjoy exclusive perks from our ⁠⁠⁠⁠⁠⁠⁠favorite Apps and Services⁠⁠⁠⁠⁠⁠⁠. Learn how to better start, manage, and grow your business with the ⁠⁠⁠⁠⁠⁠⁠best business podcasts⁠⁠⁠⁠⁠⁠⁠. SPONSORS Support our free podcast by supporting our ⁠⁠sponsors⁠⁠: • Airbnb⁠ Connect with Shawn: ⁠⁠⁠⁠⁠⁠⁠Twitter⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠LinkedIn⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠Email⁠⁠⁠⁠⁠⁠⁠ Connect with Daniel: ⁠⁠⁠⁠⁠⁠⁠Twitter⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠LinkedIn⁠⁠⁠⁠⁠⁠⁠ | ⁠⁠⁠⁠⁠⁠⁠Email⁠⁠⁠⁠⁠⁠⁠ 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! Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

Transcript

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0:00.0	One of the reasons why TSM is the semi-connected giant today is Chang's decision to go against the conventional wisdom.
0:09.0	Because at the time, every major semiconductor company was vertically integrated, and that means they designed, manufactured and packaged and packaged and packaged chips in-house.
0:19.0	So they did everything.
0:21.0	All leading companies operated that model,
0:23.6	but Chang envisioned something different,
0:26.1	which was a company that wouldn't design chips at all,
0:29.6	and instead it would only manufacture chips
0:32.8	on behalf of other companies.
0:34.9	That's basically the first pure play foundry.
0:37.4	And again, it all sounds
0:39.1	simple in retrospect because it worked out so well, but it was revolutionary back then. Because
0:44.6	the idea of just outsourcing your most valuable intellectual property, which was your chip design,
0:50.5	to a third-party manufacturer was just insane.
1:05.6	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
1:10.7	whether to add them to our
1:12.4	portfolio of stock holdings that we're building over time, slowly but surely. And before we get
1:18.6	started, I do have a quick announcement in case you haven't listened to some of our episodes
1:22.6	recently. Daniel and I are really excited to announce that we are launching a new community for investors
1:28.7	and our audience to join. This will be an exclusive community where we vet every member
1:34.1	and cap the total size of the community to basically ensure that it stays at a meaningful
1:39.3	and intimate size so that everybody can know each other and share ideas. And for a limited time,
1:44.8	we are opening up 30 spots. So if you want to join, and that sounds interesting to you,
	...

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