$Taiwan Semiconductor Manufacturing(TSM)$
The strength of the competitive advantages is reflected in the significantly above average profit margins the company has maintained over the last decade. Few companies in the planet have operating margins above 40%, and the ones that do usually have a very strong competitive moat.
The competitive moat has also resulted in attractive returns on invested capital. Taiwan Semiconductor has averaged a ROIC of ~21% over the last ten years, and it has been higher recently at ~24%. This is not an asset-light company since it requires billions in investment. It is therefore close to the ideal business, one that can absorb enormous amounts of capital and still deliver very high rates of return on it.
Comments