This article first appeared on GuruFocus .
At $411.3263, Taiwan Semiconductor Manufacturing ( NYSE:TSM ), the world's dominant contract chipmaker, picked up another supply-chain boost in its home market. Solvay plans to more than double Taiwan's annual production capacity for ultra-pure hydrogen peroxidefrom 35,000 tonnes to over 70,000 tonnesby year-end, Reuters reported Thursday.
Hydrogen peroxide sounds basic. Chipmaking purity is not. Foundries use the electronic-grade chemical to clean wafers, where a microscopic contaminant can destroy increasingly complex circuitry. Solvay is scaling its Tainan joint venture and targeting a threefold expansion of its global electronic-grade peroxide business within five to seven years.
TSMC's second-quarter results delivered $40.2 billion in revenue, a 67.7% gross margin and a stunning 60.3% operating margin. Solvay's expansion will not directly guarantee more chip sales, but suppliers rarely double capacity without seeing serious demand ahead. The valuation picture supplies the catch: TSMC's $411.3263 share price sits 27.52% above its $322.57 GF Value, showing that investors already expect near-flawless execution.
