TSMC Poised for Big Gains as Chipmaking Fees Rise

TSMC is poised to raise its chipmaking fees by 10% in 2027, which could lead to big gains for the company. Its key customers, AMD and Nvidia, will likely raise prices to accommodate the foundry giant's rising fees. TSMC operates as a pure-play foundry, manufacturing chips designed by its customers.

TSMC plays a major role in the higher prices Nvidia and AMD will charge customers due to its 73% market share in the pure-play foundry market. As a result, customers need to accept the price hikes that TSMC implements. The company reportedly charges 10%-15% higher prices from customers who place orders above the initial commitment.

Nvidia points out that the addressable market for its AI chips will reach $1 trillion next year, double the opportunity it estimates for 2026. This growth in semiconductor demand driven by AI data centers could send TSMC's stock soaring in 2027. Analysts expect TSMC's earnings per share (EPS) to grow from 59% in 2026 to 29% in 2027, but this may not be the case.