Back to top

Image: Bigstock

Can New Nanosheet Chip Nodes Cement TSM's Long-Term Tech Leadership?

Read MoreHide Full Article

Key Takeaways

  • TSM is advancing nanosheet nodes N2, N2P, and A16 to boost chip performance, power, and density.
  • N2 enters volume production in H2 2025, with tape-out activity expected to surpass 3nm and 5nm nodes.
  • Apple and AMD are early adopters of TSM's N2 node for future iPhones, Macs, and competitive CPUs/GPUs.

Taiwan Semiconductor Manufacturing Company (TSM - Free Report) , also known as TSMC, is reinforcing its nanosheet chip technology roadmap with N2, N2P, and A16, which are aimed at extending performance and efficiency at advanced nodes. Out of these, the A16 advanced node has been specifically designed to accommodate high-performance computing (HPC) products and AI-class workloads. These advanced nodes are expected to extend TSMC’s technology leadership position and enable it to capture growth opportunities into the future.

Taiwan Semiconductor’s N2 logic node is the first generation of nanosheet transistor technology and offers 10-15% speed improvement, 25-30% power improvement, and more than 15% chip density gain when compared with N3E. The logic node is on track to enter volume production in the second half of 2025. Moreover, TSMC also expects the number of new tape-outs for N2, fueled by both smartphone and HPC applications, to be higher than both 3-nanometer and 5-nanometer in their first two years.

Taiwan Semiconductor is winning important customers, such as AMD and Apple, for its new N2 advanced logic node. Apple plans to use these chips in future iPhones and Mac devices, while AMD wants to use them to make faster CPUs and GPUs to compete better in the market.

Introduced in the first quarter of 2025, N2P is an extension of the N2 family, which features improved performance and power efficiency. A16 is also a nanosheet-based technology with backside power delivery and is intended to be a logical upgrade to N2P. The A16 logic node, also introduced in the first quarter, is expected to deliver up to 15-20% power improvement and an additional 7-10% chip density gain when compared with N2P.

With fabs under construction in Taiwan and Arizona to support both N2 and A16 and volume production scheduled for N2P and A16 in the second half of 2025, Taiwan Semiconductor appears well-positioned to benefit from the next wave of AI and high-performance computing demand.

How Competitors Fare Against TSM

Two key competitors,  Intel (INTC - Free Report) and GlobalFoundries (GFS - Free Report) , are working hard to catch up with TSMC’s lead. Intel plans to launch its 2nm-based node, called Intel 18A, in the second half of 2025. Intel is focusing on new technologies like RibbonFET transistors and backside power delivery for its 18A node, similar to TSMC’s A16.

Meanwhile, GlobalFoundries is not focused on 2nm chips. Instead, it is investing in specialized chips for cars, wireless devices, and the IoTs. While GlobalFoundries does not directly compete with Taiwan Semiconductor at the most advanced nodes, it still aims to take market share in fast-growing chip segments.

TSM’s Price Performance, Valuation and Estimates

Shares of Taiwan Semiconductor have gained 9.7% year to date compared with the Semiconductor - Circuit Foundry industry’s growth of 8.7%.

TSM YTD Price Return Performance

Zacks Investment Research
Image Source: Zacks Investment Research

From a valuation standpoint, TSMC trades at a forward price-to-sales ratio of 9.08X, slightly higher than the industry’s average of 9.02X.

TSM Forward 12-Month P/S Ratio

Zacks Investment Research
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for TSMC’s 2025 and 2026 earnings implies year-over-year growth of 30.54% and 14.80%, respectively. The estimates for 2025 have been revised upward in the past 60 days, while the estimates for 2026 have witnessed a downward revision over the same time frame.
 

Zacks Investment Research
Image Source: Zacks Investment Research

TSMC currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Intel Corporation (INTC) - free report >>

Taiwan Semiconductor Manufacturing Company Ltd. (TSM) - free report >>

GlobalFoundries Inc. (GFS) - free report >>

Published in