Taiwan Semiconductor is trading at a P/E ratio of 15. ASML, a similarly important semiconductor company who is also the global leader in its respective field commands a P/E of 37. Nvidia, and AMD also trade at far higher multiples despite being largely dependent on TSM for chips.

The reason TSM is so cheap compared to these other companies is because of the geopolitical risks associated with investing in a Taiwanese company. However, this risk is way overstated on many levels.

1. China invading Taiwan is nowhere near a certainty.

2. TSM is building manufacturing plants outside of Taiwan including in Arizona.

3. Most importantly if China were to invade Taiwan, the entire stock market would drop off a cliff. US involvement and concerns over nuclear war would hit all non military stocks.

In that situation TSM probably falls like 70% but the rest of the market may drop by 30%. Buying a company trading at half its market value is entirely worth it if the biggest risk is that it would lose an extra 40% in value in the event of WW3 starting.

I don’t know about y’all, but I’d be more worried about getting drafted then I would about my portfolio underperforming the market.

Investing in TSM is like getting 2/1 odds that WW3 won’t happen in the next 10 years. If you win you double your money. If you lose, the money is the least of your concerns.