Taiwan Semiconductor (TSM) Secures Three-Decade Renewable Energy Agreement Amid Market Turbulence

Key Highlights

• Taiwan Semiconductor Manufacturing has finalized a three-decade power purchase agreement with Northland Power covering the Hai Long 2A offshore wind facility
• The chipmaker will receive the entire 294-megawatt output from the site, building on a collaboration initiated in 2022
• The complete Hai Long development encompasses 1,022 megawatts of total gross capacity distributed across three separate sites
• Shares of TSM have plummeted 54% in the last six months, approaching their 52-week minimum
• According to GuruFocus analysis, TSM trades at a 44.2% premium above its calculated GF Value, with shares at $393.83 against a fair value estimate of $273.09

Taiwan Semiconductor Manufacturing (TSM) has finalized a comprehensive 30-year energy procurement contract with Northland Power, securing the complete electricity generation from the Hai Long 2A offshore wind facility situated off Taiwan’s coast. This arrangement marks a significant expansion of the partnership between these entities, which was originally established in 2022.

Taiwan Semiconductor Manufacturing Company Limited, TSM

The Hai Long 2A installation represents a 294-megawatt offshore wind generation facility positioned approximately 45 to 70 kilometers from Changhua’s coastline within the Taiwan Strait. This newest agreement complements TSMC’s existing power procurement arrangements with the Hai Long 2B and 3 installations, marking the third component of the semiconductor giant’s renewable energy strategy with this development.

The comprehensive Hai Long initiative boasts a total gross generation capacity reaching 1,022 megawatts. Development responsibilities are shared among Northland Power (controlling 30.6%), Mitsui & Co. (holding 40%), and Gentari International Renewables (with 29.4%).

The contract becomes operational once administrative formalities conclude, anticipated to occur in late 2026. Northland’s CEO Christine Healy noted the agreement “strengthens the project’s long-term financial viability” while advancing value generation for the company’s stakeholder base.

For TSMC, this contract underscores its sustained commitment to obtaining renewable energy sources as electricity requirements from AI-focused semiconductor manufacturing continue their upward trajectory. The corporation commands approximately 70% of the worldwide advanced foundry sector as of 2025.

Manufacturing Constraints Continue Pressuring TSMC

A market analysis from TrendForce released on April 30 highlighted ongoing constraints within semiconductor production infrastructure. The primary challenge centers on limited availability of CoWoS packaging capabilities, which remain indispensable for manufacturing sophisticated chips deployed in AI systems.

TSMC maintains exclusive control over 3nm fabrication processes and serves as a pivotal participant in developing 2nm technology. Industry analysts don’t anticipate relief from the CoWoS capacity shortage until 2027 at the earliest, despite the company’s ongoing expansion initiatives.

Key customers such as Apple, NVIDIA, and AMD continue vying for constrained manufacturing capacity. Given the persistent acceleration in AI computing requirements, questions persist regarding TSMC’s capability to scale production sufficiently.

Valuation Questions Shadow Current Share Price

TSM shares currently trade at $393.83. The GuruFocus platform calculates its GF Value — representing estimated intrinsic value — at $273.09, indicating shares command a 44.2% premium relative to this analytical framework’s fair value determination.

The company’s trailing twelve-month price-to-earnings multiple registers at 32.72x, significantly exceeding its five-year median of 22.78x. GuruFocus assigns TSM a modest Valuation ranking of 5 out of 10.

However, the semiconductor manufacturer demonstrates exceptional performance across alternative metrics. It achieves perfect 10/10 scores in both Profitability and Growth categories, alongside a 9/10 Financial Strength rating. The composite GF Score reaches 97 out of 100.

Corporate insider transactions during the preceding three-month period reveal $827,355 in share acquisitions with zero reported dispositions.

TSM equity has declined 54% throughout the past half-year and currently trades in proximity to its 52-week minimum. InvestingPro’s analysis suggests the stock may be undervalued at present levels — a perspective that sharply contradicts the GuruFocus valuation framework.

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