TSMC’s lower valuation gives it an edge over ASML, analysis says
The comparison favours Taiwan Semiconductor over ASML, citing faster growth, a more moderate valuation and expanding production outside Taiwan.
An investment analysis published by Yahoo Finance compares ASML Holding’s technological lead in extreme ultraviolet lithography with Taiwan Semiconductor Manufacturing’s dominant position in advanced-chip foundry capacity. It concludes that TSMC is the more attractive investment at current valuations, while acknowledging risks across both businesses.
ASML supplies EUV machines used by advanced chipmakers, including TSMC. The analysis describes the company’s position as a technological monopoly, but notes that its machines cost hundreds of millions of dollars and are produced in relatively small volumes, which can make results uneven.
TSMC, meanwhile, is presented as the only company with sufficient foundry capacity to produce the chips powering the artificial-intelligence build-out. The analysis says its shares had risen about 35 per cent in 2026, compared with a gain of nearly 60 per cent for ASML.
That stronger share performance has widened the valuation gap. TSMC is trading at approximately 25 times forward earnings, according to the analysis, compared with nearly 40 times for ASML. It also says TSMC has grown faster than ASML in nearly every quarter, although future growth is not guaranteed.
TSMC has committed an additional US$100 billion to production in Arizona, taking its stated investment there to about US$265 billion. The expansion is intended to diversify production beyond Taiwan and reduce concentration risk, but it does not remove geopolitical or execution risks.
The analysis, originally published by The Motley Fool and carried by Yahoo Finance, flags two key risks: excess chip capacity if AI-related demand weakens, and tensions involving Taiwan and mainland China. Its preference for TSMC is an investment thesis rather than financial advice.
