TSMC

TSMC has NT$1,519 billion sitting in construction-in-progress and equipment not yet in service — 41% of net PP&E — accumulating almost no depreciation. PwC flagged the timing of when that pool goes live as a key audit matter in both the 2024 and 2025 audits. What does a skeptic do with that?

Per the FY2025 20-F, EUI and CIP totaled NT$1,519.0B at December 31, 2025, up 67.6% from NT$907.5B at December 31, 2024, representing 41.2% of net PP&E versus 29.6% the prior year. Depreciation on assets in this pool is approximately zero until they are placed in service. PwC identified the timing of EUI/CIP service commencement as a key audit matter in both the FY2024 and FY2025 audit reports. Management's judgment on when assets enter service determines when depreciation ramps — and FY2025 depreciation of NT$679.7B grew only 4.0% year over year despite the 67.6% CIP build. FY2026 depreciation is guided at high-teens percent year over year, implying the pool will start converting soon and the D&A load is about to accelerate.

TSMC's capex was roughly US$30 billion in 2024, US$41 billion in 2025, and is guided at US$52 to $56 billion in 2026. That is nearly doubling in two years. What demand assumption sits underneath that commitment?

The cumulative three-year capex through FY2025 is approximately US$101B, and FY2026 alone is guided at more than 50% of that prior three-year total. The demand assumption is a 2024-to-2029 AI accelerator revenue CAGR that management raised to approximately mid-to-high-50s percent. AI accelerators represented approximately high-teens percent of FY2025 revenue and doubled in the year. FY2025 total revenue was US$122.42B (+35.9%), with HPC at 58% of revenue. The downstream demand-quality frame: MIT Project NANDA found approximately 95% of enterprise GenAI pilots show no measurable P&L impact. The capex bet is on AI infrastructure demand; whether the end-user workloads that justify that infrastructure produce P&L is the sheet's Indicator 6 flag.

TSMC uses approximately 9% of Taiwan's national electricity. A scenario model projects that could reach 23.7% of Taiwan's grid by 2030. More than 90% of leading-edge chips are still made in Taiwan. What is the actual physical exposure?

FY2024 TSMC electricity consumption was 25.55B kWh, representing approximately 9% of Taiwan's national electricity supply per TSMC disclosures. An S&P scenario model suggests that figure could reach 23.7% of Taiwan's national grid by 2030. More than 90% of leading-edge chip manufacturing remains in Taiwan per Brookings Institution analysis, with TSMC Arizona Fab 21 beginning 4nm mass production only in early 2025. Advanced U.S. capacity remains years behind Taiwan's leading-edge volume per the same sources. The geopolitics overlay in this sheet is scored red (approximately 72–85) on geographic concentration — not on an invented conflict probability. TSMC's own 20-F risk factors name military conflict and geopolitical tensions in the ROC explicitly.

CEO C.C. Wei is not selling. Does that change the fragility picture?

Per this sheet's Indicator 3, CEO C.C. Wei shows only ESPP purchases and no code-S sales in the review window, scoring green at approximately 15 to 22. The sheet scores this deliberately low and says so. The convergence case rests on Indicators 1 (depreciation/EUI, amber), 2 (capex-demand, amber-red), and 5 (energy, amber-red), plus the geopolitics overlay scored red. The CEO's behavior is a net positive for TSMC's credibility signal — and keeping Indicator 3 genuinely low is what makes the elevated indicators more credible, not less. That asymmetry is intentional.