The Most Important Stock in the World? TSMC’s Role in the AI Race Revealed!

Summary

Earn Your Leisure Podcast – Episode Summary

Episode Title: The Most Important Stock in the World? TSMC’s Role in the AI Race Revealed!
Release Date: March 23, 2025
Hosts: Rashad Bilal and Troy Millings
Podcast Description: Earn Your Leisure provides behind-the-scenes financial insights into the entertainment and sports industries, highlights entrepreneurial backstories, breaks down business models, and examines the latest trends in finance, blending college business class concepts with pop culture for a unique exploration of the business world.

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Introduction to the Episode

In this compelling episode of Earn Your Leisure, host Rashad Bilal delves deep into the pivotal role of Taiwan Semiconductor Manufacturing Company (TSMC) in the burgeoning artificial intelligence (AI) landscape. Alongside expert analysts, Rashad explores why TSMC is being hailed as potentially the most crucial stock globally, its influence on the AI race, and the broader geopolitical tensions surrounding it.

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TSMC: The Linchpin of the AI Revolution

Analyst 1 passionately asserts the significance of TSMC in the current technological milieu. At [01:27], he states:

"Taiwan Semiconductor. I think they are the most important company on planet earth right now. Next to Nvidia. Next Nvidia."

He emphasizes TSMC’s indispensable role in advancing AI and quantum technologies, underscoring its superiority over Intel:

"Intel's done. TSM is better than Intel by far." ([01:58])

Analyst 2 concurs, reinforcing the notion that TSMC's prominence is unassailable:

"Would go with for sure, yeah." ([02:23])

The conversation highlights TSMC’s strategic position in manufacturing cutting-edge semiconductors essential for AI advancements, making it a cornerstone for tech giants like Nvidia and Microsoft.

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Geopolitical Risks: The China-Taiwan Tension

Rashad introduces the critical issue of geopolitical instability, questioning the potential threats posed by China’s aggressive stance towards Taiwan:

"What about the geopolitical risk of China? And they've already have tremendous aggression towards Taiwan." ([04:18])

Analyst 1 acknowledges the threat but suggests confidence in U.S. resilience under the Biden administration:

"I think it's pretty clear under Biden this may not have happened." ([04:53])

However, the discussion intensifies as both analysts consider the catastrophic implications of a Chinese invasion:

"If China chooses to invade Taiwan to take back what they believe is theirs, big T gonna hit that button." ([05:10])

Rashad remains skeptical about the U.S. willingness to engage in such a conflict, highlighting the unsustainable nature of a war with China:

"We can't go to war with China. No, that's not sustainable." ([05:48])

Analyst 2 elaborates on the potential economic fallout:

"Does that do to their semi economy?" ([07:55])

Analyst 1 dismisses concerns about economic losses for China, suggesting that the Chinese leadership might prioritize strategic dominance over economic stability:

"I don't think they care about their economy... the most dangerous person to fight is a person who doesn't care if they die." ([08:13])

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U.S. Strategic Responses and Infrastructure Investments

The conversation shifts to the U.S. response to mitigate reliance on TSMC through substantial investments in domestic semiconductor manufacturing:

Analyst 2 references President Gigi Ping’s initiative to bolster U.S. semiconductor capabilities:

"America has now allowed them to build whatever they want, give them tax incentives to now bring their foundries to the US." ([06:32])

The analysts discuss the scale of these investments, noting the dramatic increase from an initial $28 billion to a $100 billion project aimed at replicating TSMC’s infrastructure within the United States over the next five years.

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Implications for Global Technology and the AI Race

The core of the discussion revolves around how TSMC’s fate directly influences the global AI race. Analyst 1 draws parallels between TSMC’s strategic position and a critical piece on a chessboard, highlighting its indispensability:

"That's why it's like open door. And Gigi Ping was saying, like, these guys... have built as nearly as much infrastructure or will have as much infrastructure as they had in Taiwan..." ([06:32])

Analyst 2 underscores the urgency and stakes of maintaining technological supremacy:

"This is a race that they, they definitely want to win." ([09:20])

Rashad points out that technological leadership is not solely determined by having top-tier companies but also by broader national capabilities and influence:

"If China is the most dominant in technology, the most dominant army, the most influential on a global scale... they have a plan to be America 2.0." ([09:54])

The dialogue highlights the strategic importance of TSMC beyond mere stock valuation, positioning it as a linchpin in maintaining technological and economic dominance in the AI era.

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Economic and Technological Dominance

Analyst 2 reflects on the broader implications of technology control:

"The superpowers will control the technology, technological advances over the next five, ten years." ([11:05])

Analyst 1 adds that while great companies may remain within the U.S., national policies and economic strategies will influence technological supremacy:

"We're always going to have the greatest companies, but to Rashad's point... if they get that piece on the chessboard, which I've been." ([12:05])

Rashad contrasts the U.S. and China's trajectories, emphasizing China’s strategic global placements and technological integrations:

"They have strategically placed themselves all over the world... they have a plan to be America 2.0." ([09:54])

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Conclusion and Final Insights

The episode culminates in a sobering reflection on the intertwined nature of technology, geopolitics, and economic strategies. Rashad and the analysts stress the critical role of TSMC in the AI landscape and the potential ramifications of geopolitical tensions disrupting this balance. They underscore the need for strategic investments and international collaborations to safeguard technological advancements and maintain competitive edge in the global arena.

Notable Quotes:

• Analyst 1: "Taiwan Semiconductor... they are the most important company on planet earth right now." ([01:27])
• Rashad: "We can't go to war with China. No, that's not sustainable." ([05:48])
• Analyst 2: "AI is still a story... for the next two years, it's going to be." ([02:36])
• Analyst 1: "I don't think they care about their economy... the most dangerous person to fight is a person who doesn't care if they die." ([08:13])
• Rashad: "China wants to be the number one superpower in the world." ([09:54])

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Key Takeaways

1. TSMC's Strategic Importance: TSMC is pivotal in the advancement of AI and quantum technologies, making it a cornerstone for global tech giants.
2. Geopolitical Tensions: The potential for Chinese aggression towards Taiwan poses significant risks to global technological stability and economic security.
3. U.S. Countermeasures: Substantial investments in domestic semiconductor manufacturing aim to reduce dependency on TSMC and bolster national technological capabilities.
4. Global Technological Race: Control over semiconductor manufacturing is crucial for maintaining technological supremacy in the AI era, influencing global power dynamics.
5. Economic Implications: Geopolitical conflicts can have far-reaching impacts on global economies, technological advancements, and national security.

This episode of Earn Your Leisure provides an in-depth analysis of TSMC's critical role in the AI race, the geopolitical challenges surrounding Taiwan, and the strategic moves by the U.S. to maintain its technological edge. For listeners keen on understanding the intricate connections between technology, finance, and global politics, this episode offers valuable insights and expert perspectives.

Transcript

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[Rashad]

Term supply yeah, one stock to invest in the next two years. What would it be?

[Analyst 1]

I hate to take your pick but say it side Taiwan Semiconductor. Taiwan Semiconductor. I think they are the most important company on planet earth right now. Next to Nvidia. Next Nvidia. But Taiwan Semiconductor I think is incredibly important in us winning that AI race, quantum race and all things AI. And this had a deep enough discount where I like it. If I can get it at 1:58 I would love it. Even at 162 I will buy in and I will hold for long term. Intel's done. TSM is better than intel by far. Please stop asking. I've been on this tirade for two years. So Taiwan Semiconductors, the one that I.

[Analyst 2]

Would go with for sure, yeah.

[Analyst 1]

No, it doesn't mean sell Apple. No, it does not mean to sell Nvidia or Microsoft. Please. No, it doesn't mean sell vo. But if I have to start from scratch right now, TSM for sure.

[Analyst 2]

I'm not gonna argue with you on this one man. I'm. I'm actually. Those are the two. Those are the two. If it was 30k, if it was 50k set, whatever the k was, those would be my two especially, and I covered this on the last class. I said AI is still a story. Don't, don't get fooled. AI is still a story. I know we went back and forth last week about the AI trade, but it's still a story. And definitely for the next two years, it's going to be. When we talk about the expansion of artificial intelligence, when we talk about inferencing, and that was something we spoke about. It's here. We got Carnegie hall and we saw it firsthand. And every time we go to a new space, you're starting to see the remnants of it. But yeah, I mean, Blackwell for sure. And we're talking about Nvidia's case. We're going to see what that does. It's sold out now. There's a Blackwell Ultra. So you could get on, right? Ultra, ultra black on these, on these folks. And then you got Ruben, you still got Reuben sitting in the, waiting to be deployed to the people. Hopper is still moving, right. There would be no deep seat story if there wasn't a Hopper chip. So that's still the story. And none of that happens if they can't be manufactured by the company that we just named tsm. So those are for the next two years for sure. If you ask me five, I might have gave you a two, maybe a different slight alteration. But the next two, we're talking about data centers, when we're talking about prompt engineering, when we're talking about personal agents. Those two are going to be the story for sure.

[Rashad]

Yeah.

[Analyst 1]

Rashad, what about you? Or is there one that you love that if you, if you were hype. People love this question. You down to your last dollar, the last 30, 000, which one would you invest into?

[Rashad]

Well, the first before that, because the pushback for Tsunam people are going to say is what about the geopolitical risk of China? And they've already have tremendous aggression towards Taiwan. So for the people that are saying the risk of China invading Taiwan or China trying to cyber hack or bully or whatever, what is the threat to TSM with China having such aggression towards Taiwan?

[Analyst 1]

I think I was one of the ones who probably brought up the threat first. But I think it's pretty clear under Biden this may not have happened. But if China chooses to invade Taiwan to take back what they believe is theirs, big T gonna hit that button. Drake should have hit on Kendrick.

[Analyst 2]

That's the red button.

[Analyst 1]

This is like SGA is like a free agent and LA is like, come on, this piece is the piece on a chessboard that matters for the race that batters. Because the war won't be boots on ground like you talked about before.

[Rashad]

But what, what, what, oh, what button are you referring to?

[Analyst 1]

Every drone we have in sight. And cap America and black in America, Thor, Autumn, little weapons we have.

[Rashad]

Well, we can't. We can't go to war with China.

[Analyst 1]

Oh, we go, he gonna hit.

[Rashad]

No, that's, that's, that's not sustainable.

[Analyst 1]

Suicide. Suicide.

[Rashad]

No, that's not sustainable. That the whole world's gonna. First of all, that'll ruin the entire world.

[Analyst 2]

Second of all, that's the Warwood. I think the, the invasion of Taiwan. Semiconductor would.

[Rashad]

It affects the world, but it doesn't. And just China's gonna be. China's gonna be in control now.

[Analyst 2]

No, I think that China's gonna be.

[Rashad]

In control now, which they are already creeping into control now anyway. That's just. That would be like cherry on top. Like.

[Analyst 2]

Okay, but that's what I'm saying. As soon as you got that, you got the throne.

[Rashad]

Like, you have the throne.

[Analyst 2]

They won't let them get it.

[Rashad]

They have it.

[Analyst 2]

No, no, I'm talking about TSM in terms of. That's why it's like open door. And Gigi Ping was saying, like, these guys, America has now allowed them to build whatever they want, give them tax incentives to now bring their foundries to the US so it originally started at 28 billion. Now it went up to 60 billion last month. It was another 100 billion dollar project. So they've built as nearly as much infrastructure or will have as much infrastructure as they had in Taiwan up and running in the next five years and on the domestic land of the United States. So in the event that there's an invasion, business. Business still gonna run.

[Rashad]

No, it's still gonna have a major impact though, if China invades Taiwan.

[Analyst 2]

Yeah, for sure.

[Rashad]

Because if China invades Taiwan, they're taking Taiwan. There's no. This is like if the United invades Aruba, like, if China. If China really decides that they're going to deal with the consequences later and today is the day that they fully just take Taiwan under their control. There's nothing that, there's nothing that. There's nothing that anybody can do about it now. You got to start playing the diplomatic game. You got to sanction China and you got to try to get them and you got to try to do it that way. But they can literally just take Taiwan any. At any point in time that they want. There's consequences that they do that. That's why they haven't done that. But there's no fight. It's not going to be a Ukraine war. No. It's going to be a two day.

[Analyst 2]

Would it be beneficial to who?

[Analyst 1]

For China.

[Analyst 2]

Yeah. In terms of, let's say they shut down a TSM and until they have full control over it. Right. Does that, what does that do to their, their semi economy?

[Analyst 1]

I don't think they care about their economy. Like the most dangerous person to fight is a person who doesn't care if they die. That's true. So like if they don't care about being defeated because if that's the case, they wouldn't have had their market so constricted the last three or four years. They could have take, taken pole position from Amazon with Alipapa and they chose to shut it down.

[Analyst 2]

So it's very interesting until recently, until recently and that, that, that was, I think was a CEO. It was the, the owner of the Brooklyn Nets. I forget his name. His name said. But he said Gigi Payne called everybody in, all the CEOs of the major companies and called them in. He said, look, this is the time. Right now is the time. AI is the story and we have to figure out how we're going to lead and how we're going to build infrastructure to make sure that we stay in this race. Called them all in. Since that meeting, we've seen now this Fantastic four have a nice run with Tencent and Badu and Alibaba so they understand what's at stake here. Right? Like we're not.

[Rashad]

What's that statement? What.

[Analyst 2]

Number one, they can't. This is a race that they, they definitely want to win. Now this does. This administration said there's no way that anyone will ever defeat us in this AI race because of the infrastructure and the companies that we have. But they all decide to figure out like, yeah, we're going to work together. I don't know if that's what I'm saying. The invasion at this point does, does a war or the threat of war, is that good for business?

[Rashad]

When you say, when you say work together, what do you mean?

[Analyst 2]

The CEOs of the Chinese companies. CEOs of Chinese companies.

[Analyst 1]

Yeah. They telling America, y'all better get down and lay down.

[Rashad]

Yeah. China doesn't want to be in competition with America. They want to be over America. That is their goal. Their goal is not to be in friendly competition with America. Their goal is to be the number one superpower in the world. And it did. I mean they have the largest military in the world right now. They're going to have the largest economy in the world in at least five years. They're already ahead as far as technology. If they're not ahead of America now, they'll be far ahead in the next five to 10 years. It won't even be close as far as the technology gap. They've already strategically placed themselves all over the world and are controlling economies from Africa to the Caribbean to South America. They're all over the world. They have a plan to be America 2.0. They don't.

[Analyst 2]

I'm still thinking in Tim, in terms of the greatest companies in the world are still where?

[Analyst 1]

Here. But if they get that piece on the chessboard, which I've been.

[Analyst 2]

Which one? Which one of them is the piece? That piece. Oh, TS that piece.

[Analyst 1]

What?

[Analyst 2]

Because if you think about the last.

[Analyst 1]

Infinity Stone, culturally, Taiwan is theirs. It was stripped away.

[Analyst 2]

The superpowers will control the technology, technological advances. Right? You agree?

[Analyst 1]

Say that again.

[Analyst 2]

I said the superpowers. The. I guess the Max 7, we can call it. They will control the technological advances over the next five, ten years. Or they're. Or they're going to purchase the company that does via OpenAI. Microsoft.

[Rashad]

Yeah, but you can have great companies on your soil and still not be the number one country in the world. Like America still has great companies, but they still got. They still got an answer to China. And if China is the most dominant in technology, the most dominant army, the most influential on a global scale, I mean, it's just like Japan. Japan has a lot of great companies, but they have no real power.

[Analyst 2]

No, I said the greatest companies, though. It's like we're talking about.

[Analyst 1]

We're always going to have the greatest companies, but to Rashad's point, okay, we have the greatest companies on earth with the worst spending habits of any large nation ever. I don't like that stuff. Elon doing the Doge conversation though. The debt to GDP ratio being what it is. Oh, it needs to be some cuts happening. They just want to cut everything black first. I don't like that part. But there has to be. Credit card debt is at an all time high. Government spending at an all time high. How housing like there. There's no more affordable anything. Damn near like if I was 19 to 20 living in this world right now. Oh my God. Tough, tough. And while India, we built that middle class, we built up China sold off some important parts of tech. And for you, bitcoin, Maxis, China owns almost as much bitcoin as us as, well, you know Michael said he gonna take his ass right to Shanghai. If things get hot here.

[Analyst 2]

It's gonna be like the Dark Knight.

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