Nvidia still in high demand. Broadcom may struggle in the race against TSMC.

The January 2025 monthly revenue of TSMC resulted in a 35.9% year-over-year jump that can indicate that the demand for Nvidia's AI chips is still growing. This is because Nvidia is outsourcing the fabrication of the semiconductor chips it produces, focusing only on creating the design of those chips. The manufacturing is done by TSMC, meaning that TSMC's revenue can be an indicator of demand for Nvidia's chips that are currently important as an engine for the AI revolution.

Broadcom and TSMC are now in unofficial conversations to bid for Intel, still in the stage of rumors, or what could be seen as an early stage. The competition between Broadcom and TSMC to bid for Intel is complex because Broadcom and TSMC are mostly interested in different areas of Intel. For Broadcom, Intel’s chip-design and marketing business is the attractive part. For TSMC, Intel’s chip plants are something they would be interested in. An important layer of complexity that cannot be ignored is that Broadcom has its headquarters in Stanford Research Park, Palo Alto, California, U.S. The location of TSMC’s headquarters is in Hsinchu Science Park, Taiwan. There are political aspects that can affect negotiations overnight. Also, labor costs are different from country to country. For now, competition between Broadcom and TSMC is fierce in terms of market capitalization, with Broadcom being worth $1.092 trillion, while TSMC's value is $1.057 trillion. Currently, Broadcom is richer but that could change any time even this week! Some of the challenges for Broadcom in that race are that TSMC is the world's largest semiconductor foundry and richest company in Taiwan (not a random small competitor), and that Broadcom’s trailing P/E is currently too high: 180.65.