Why Taiwan Semiconductor (TSM) Became Essential to the Chip Industry Attiya Zainib Mon, October 12, 2026 at 10:15 AM EDT 3 min read TSM -1.12% ^GSPC -0.07% CL=F +2.08% TSM -1.12% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
St. James Investment Company recently released its "Value Investors" third-quarter 2026 investor letter. A copy of the letter can be downloaded here. The fund is operating in an increasingly challenging value-investing environment marked by rising interest rates and energy prices, record government debt, elevated stock-market valuations, and ongoing geopolitical conflicts, even as the S&P 500 remains near all-time highs. The letter does not report a specific third-quarter return for the Select Value portfolio; instead, St. James highlights a market in which U.S. equities have dramatically outperformed bonds since COVID, with stocks beating bonds by an average of 28% annually, while U.S. households now hold 52% of their financial assets in equities. The firm argues that rising oil prices and long-term Treasury yields are increasing the risk of inflation and stagflation, with the 10-year Treasury yield at 5.23% and the 30-year yield at 5.55%, both reflecting substantially higher borrowing costs. Looking ahead, St. James remains cautious about the AI-driven market and believes investors should avoid chasing narratives and instead focus on businesses with durable competitive moats, strong economics, and valuations that provide a sufficient discount to absorb unexpected risks, emphasizing a disciplined, patient value-investing approach. In addition, please check the Fund's top five holdings to know its best picks in 2026.
In its third-quarter 2026 investor letter, St. James Investment Company discussed Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) while examining how specialized chip manufacturing helped reshape competition in the semiconductor industry. Taiwan Semiconductor Manufacturing Company Limited, commonly known as TSMC, is a semiconductor foundry that manufactures chips designed by other companies. Its manufacturing capabilities enable fabless chip designers to access advanced production processes without having to build and operate their own fabrication facilities. The one-month return of Taiwan Semiconductor Manufacturing Company Limited was 8.44% while its shares traded between $266.82 and $487.47 over the last 52 weeks. On October 9, 2026, Taiwan Semiconductor Manufacturing Company Limited stock closed at approximately $457.99 per share, with a market capitalization of about $2.35 trillion.
St. James Investment Company stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q3 2026 investor letter:
"AMD's answer, beginning in 2008, was to go 'fabless' and later stake everything on a clean-sheet architecture (Zen) manufactured at Taiwan Semiconductor Manufacturing Company Limited's (NYSE:TSM) facilities. Because AMD could not match Intel's capital spending, it spun off its factories and outsourced its chip production to TSMC. This innovation removed the requirement that a challenger be a world-class manufacturer while TSMC's rise made the fabless chip company possible (Click Here To Read The Letter In Detail)."
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is in 6th position on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. As per our database, 249 hedge fund portfolios held Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) at the end of the second quarter, which was 234 in the previous quarter. While we acknowledge the risk and potential of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
In another article, we covered Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and shared our views on the company's 77.4% profit growth. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.
This article is originally published at Insider Monkey.
