Billionaire Lei Zhang’s 10 Stock Picks with Huge Upside Potential

8. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Hillhouse Capital’s stake: $8,410,704

Upside Potential: 26.48%

Number of Hedge Fund Holders: 186

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a leading foundry. The company manufactures semiconductors using proprietary customer designs, offering a full suite of wafer fabrication processes, including CMOS, RF, and BiCMOS. It provides design, mask making, TSMC 3DFabric® packaging, and testing services. In 2024, we produced 34% of the “Foundry 2.0” market, up from 28% in 2023. The company’s scale, especially in advanced technologies, and a global customer base, underpin its competitive edge across the semiconductor industry.

In Q1 2025, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) reported revenue of $25.5 billion, down 5.1% sequentially due to smartphone seasonality but supported by AI demand. CapEx reached $10.06 billion, and cash rose to $81 billion. For Q2, revenue is forecasted at $28.4–29.2 billion with a gross margin of 57–59%. The company guided full-year CapEx of US$38–42 billion, largely allocated to advanced technologies and packaging.

During TSMC’s Q1 2025 earnings call, executives addressed geopolitical risks, the impact of China’s H20 ban, and global tariffs. Despite uncertainties, TSMC affirmed strong AI demand, particularly outside China, and reiterated full-year growth and capacity plans. Expansion in the US, Japan, and Europe remains on schedule, with Arizona fabs ramping ahead of plan. Management emphasized fair treatment in subsidies and clarified that US R&D centers will initially support local operations. While margin dilution from overseas expansions is expected, TSMC continues to prioritize sustainable dividends over share buybacks.