I'm LongbridgeAI, I can summarize articles.Taiwan Semiconductor Manufacturing Company (TSMC) is experiencing a 20% upside potential in its stock despite geopolitical risks. The company reported $122.54 billion in revenue, a 36.1% increase year-over-year, driven by AI demand. However, U.S. restrictions on China and the ongoing Iran war pose supply chain risks. Analysts remain optimistic, with Bernstein raising TSMC's price forecast, citing strong AI growth and resilient non-AI demand. TSM shares were up 0.04% at $339.40 in premarket trading.
Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) is riding the AI boom to deepen its market lead while navigating rising global risks.
AI Boom Strengthens Taiwan Semiconductor's Market Leadership
Taiwan Semiconductor has strengthened its dominance in the global chip market, capturing nearly 70% of the foundry share in 2025 as demand for advanced chips surged. The company reported $122.54 billion in revenue, up 36.1% year over year, driven largely by strong demand for cutting-edge technologies like its 3-nanometer process.
This growth has widened the gap with competitors such as Samsung Electronics Co., Ltd. (OTC:SSNLF), whose market share remains in the single digits. Rising demand for AI infrastructure continues to push up pricing and reinforce Taiwan Semiconductor's leadership in advanced chip manufacturing.
China Restrictions Drive Competition And Demand Shifts
At the same time, U.S.-led restrictions on China have limited Chinese firms' access to Taiwan Semiconductor's manufacturing services and advanced chips from companies like Nvidia Corp. (NASDAQ:NVDA). In response, Beijing is accelerating efforts to build a domestic semiconductor ecosystem.
Chinese firms are developing 7-nanometer chip capabilities through companies like Hua Hong and SMIC, with support from partners such as Huawei. Meanwhile, Chinese tech companies are expanding overseas AI infrastructure to access Nvidia chips, increasing demand for Taiwan Semiconductor's production capacity.
Iran War Raises Supply Chain And Cost Risks
The ongoing Iran war is adding another layer of uncertainty by threatening supplies of critical materials like helium and sulfur and disrupting shipping routes such as the Strait of Hormuz.
Taiwan's heavy reliance on energy imports from the Middle East makes Taiwan Semiconductor particularly vulnerable to disruptions in fuel supply and rising electricity costs, which could increase chip production costs and pressure margins, Bloomberg reported on Monday.
Investors have already reacted to these risks, with Taiwan Semiconductor shares falling about 7% since the conflict began, reflecting concerns that prolonged disruptions could ripple across the semiconductor supply chain and global tech industry.
Overall, while Taiwan Semiconductor continues to ride strong AI-driven growth, geopolitical tensions are simultaneously fueling demand and introducing new risks to its supply chain and cost structure.
Analyst Take On Taiwan Semiconductor
Bernstein sees about 20% upside in Taiwan Semiconductor shares and raised its price forecast, saying the company's growth outlook remains strong despite Middle East tensions.
AI demand continues to accelerate while non-AI demand stays resilient, with XPU demand still exceeding capacity and TPU demand increasing, analyst Mark Li noted.
Li expects AI revenue to expand further, supported by rising demand for HBM components and additional capacity investments, such as Chip on Wafer on Substrate (CoWoS).
TSM Price Action: Taiwan Semiconductor shares were up 0.04% at $339.40 during premarket trading on Tuesday, according to Benzinga Pro data.
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