In the fast-evolving semiconductor industry, Taiwan Semiconductor Manufacturing Company Limited (TSM) and Nova Ltd. (NVMI) stand out for their innovation and market presence. TSM leads in wafer fabrication and integrated circuits, while Nova specializes in precision metrology systems essential for semiconductor manufacturing. This comparison highlights their unique strengths and growth potential, helping you identify which company aligns best with your investment goals. Let’s uncover the more promising choice for your portfolio.
Table of contents
Companies Overview
I will begin the comparison between Taiwan Semiconductor Manufacturing Company Limited and Nova Ltd. by providing an overview of these two companies and their main differences.
Taiwan Semiconductor Manufacturing Company Limited Overview
Taiwan Semiconductor Manufacturing Company Limited (TSM) is a leading semiconductor manufacturer headquartered in Hsinchu City, Taiwan. The company specializes in wafer fabrication processes and produces integrated circuits used in high performance computing, smartphones, IoT, automotive, and digital consumer electronics. Established in 1987, TSM holds a dominant market position with extensive global operations and a workforce of over 65K employees.
Nova Ltd. Overview
Nova Ltd. (NVMI) designs and manufactures process control systems for semiconductor production, focusing on metrology platforms that support various manufacturing steps like lithography and deposition. Headquartered in Rehovot, Israel, Nova serves integrated circuit sectors including logic, foundries, and memory manufacturers. Founded in 1993, the company employs around 1.2K people and operates internationally, including in Taiwan, the US, China, and Korea.
Key similarities and differences
Both TSM and Nova operate within the semiconductor industry but occupy different niches: TSM primarily fabricates semiconductor wafers while Nova specializes in metrology and process control equipment. TSM’s business model is centered on large-scale manufacturing and global distribution, contrasting with Nova’s focus on specialized technology solutions for process optimization. Additionally, TSM’s scale and market cap dwarf Nova’s, reflecting their differing roles and market reach.
Income Statement Comparison
This table presents a side-by-side comparison of key income statement metrics for Taiwan Semiconductor Manufacturing Company Limited and Nova Ltd. for the fiscal year 2024.
| Metric | Taiwan Semiconductor Manufacturing Company Limited (TSM) | Nova Ltd. (NVMI) |
|---|---|---|
| Market Cap | 1.70T TWD | 12.2B USD |
| Revenue | 2.89T TWD | 672M USD |
| EBITDA | 1.98T TWD | 205M USD |
| EBIT | 1.32T TWD | 188M USD |
| Net Income | 1.16T TWD | 185M USD |
| EPS | 223.4 TWD | 6.31 USD |
| Fiscal Year | 2024 | 2024 |
Income Statement Interpretations
Taiwan Semiconductor Manufacturing Company Limited
TSMC’s revenue grew significantly from 1.34T TWD in 2020 to 2.89T TWD in 2024, with net income rising from 510B TWD to 1.16T TWD in the same period. Margins remained robust, with a gross margin of 56.12% and net margin around 40%. The 2024 year showed strong growth, with revenue up 33.9% and net income expanding by 36%, though net margin growth was neutral.
Nova Ltd.
Nova Ltd. increased revenue from $269M in 2020 to $672M in 2024, while net income surged from $48M to $184M. Margins improved as well, with a gross margin of 57.57% and a net margin of 27.33% in 2024. The latest year showed favorable growth, with revenue rising nearly 30% and net income up over 34%, supported by a 3.8% increase in net margins.
Which one has the stronger fundamentals?
Both companies display favorable income statement trends with consistent revenue and net income growth and strong margins. TSMC exhibits higher absolute scale and margin levels, especially net margin at 40%, while Nova shows superior relative growth rates and margin improvements over the period. Each demonstrates solid fundamentals, but with different profiles in scale versus accelerated growth.
Financial Ratios Comparison
Below is a comparative overview of the most recent key financial ratios for Taiwan Semiconductor Manufacturing Company Limited (TSM) and Nova Ltd. (NVMI) for fiscal year 2024.
| Ratios | Taiwan Semiconductor Manufacturing Company Limited (TSM) | Nova Ltd. (NVMI) |
|---|---|---|
| ROE | 27.3% | 19.8% |
| ROIC | 20.0% | 13.4% |
| P/E | 29.0 | 31.2 |
| P/B | 7.92 | 6.18 |
| Current Ratio | 2.36 | 2.32 |
| Quick Ratio | 2.14 | 1.92 |
| D/E (Debt to Equity) | 0.25 | 0.25 |
| Debt-to-Assets | 15.6% | 17.0% |
| Interest Coverage | 126.0 | 116.2 |
| Asset Turnover | 0.43 | 0.48 |
| Fixed Asset Turnover | 0.88 | 5.06 |
| Payout ratio | 31.3% | 0% |
| Dividend yield | 1.08% | 0% |
Interpretation of the Ratios
Taiwan Semiconductor Manufacturing Company Limited
TSM shows mostly strong financial ratios with favorable net margin at 40.02% and ROE at 27.29%, indicating efficient profitability. Its liquidity and leverage ratios are solid, with a current ratio of 2.36 and low debt to assets at 15.65%. However, high P/E (29.04) and P/B (7.92) ratios raise valuation concerns. The company pays dividends, yielding 1.08% annually, supported by stable free cash flow, reflecting moderate payout risk.
Nova Ltd.
NVMI presents generally favorable profitability with a net margin of 27.33% and ROE at 19.81%, though its WACC at 12.21% is unfavorable, suggesting higher capital costs. Liquidity ratios remain healthy, and the firm maintains low leverage. The P/E ratio is somewhat elevated at 31.2, and the company does not pay dividends, likely focusing on reinvestment and growth, consistent with its semiconductor process control business model.
Which one has the best ratios?
Both companies exhibit mostly favorable ratios, but TSM’s stronger profitability and lower capital costs slightly outweigh NVMI’s advantages, despite TSM’s valuation concerns. NVMI’s lack of dividend and higher WACC are drawbacks, though its fixed asset turnover is notably higher. Overall, TSM’s profile appears more balanced in terms of returns and financial stability.
Strategic Positioning
This section compares the strategic positioning of TSM and NVMI, focusing on Market position, Key segments, and Exposure to technological disruption:
TSM
- Leading global semiconductor foundry with strong competitive pressure in chip manufacturing.
- Focused on wafer fabrication and integrated circuits for computing, smartphones, automotive.
- Invests in advanced technology development and startups to maintain manufacturing edge.
NVMI
- Niche player in semiconductor process control systems facing competition in metrology tools.
- Specialized in metrology platforms for process control in lithography, etch, and packaging.
- Relies on technology innovation for advanced metrology but limited scale compared to foundries.
TSM vs NVMI Positioning
TSM pursues a diversified business model centered on wafer fabrication and integrated circuits, leveraging scale and technology investment. NVMI concentrates on metrology systems, targeting a specific segment with growth potential but less diversification and scale.
Which has the best competitive advantage?
TSM shows a slightly favorable moat with value creation despite declining profitability, indicating established competitive advantage. NVMI, also slightly favorable, is improving profitability but currently sheds value, reflecting a developing competitive position.
Stock Comparison
The past year has seen significant bullish momentum for both Taiwan Semiconductor Manufacturing Company Limited (TSM) and Nova Ltd. (NVMI), with strong price appreciations and clear acceleration in their stock trends.
Trend Analysis
Taiwan Semiconductor Manufacturing Company Limited (TSM) exhibited a strong bullish trend over the past 12 months, with a price increase of 152.54% and accelerating momentum. The stock ranged from a low of 127.7 to a high of 327.11, showing high volatility with a standard deviation of 51.25.
Nova Ltd. (NVMI) also demonstrated a bullish trend, increasing 155.25% over the same period with acceleration. NVMI’s price fluctuated between 159.92 and 413.04, with slightly higher volatility reflected in a standard deviation of 55.12.
Comparing both stocks, NVMI slightly outperformed TSM with a higher overall price increase of 155.25% versus 152.54%, delivering the strongest market performance during the analyzed period.
Target Prices
Here is the consensus target price outlook from verified analysts for the two semiconductor companies.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Taiwan Semiconductor Manufacturing Company Limited | 400 | 330 | 361.25 |
| Nova Ltd. | 390 | 335 | 362.5 |
Analysts expect both TSM and NVMI to trade above their current prices, with consensus targets around 361 and 363 respectively, indicating moderate upside potential.
Analyst Opinions Comparison
This section compares analysts’ ratings and grades for Taiwan Semiconductor Manufacturing Company Limited (TSM) and Nova Ltd. (NVMI):
Rating Comparison
TSM Rating
- Rating: A- indicating a very favorable assessment of TSM’s financial standing.
- Discounted Cash Flow Score: 5, very favorable, suggests undervaluation potential.
- ROE Score: 5, very favorable, showing excellent profit generation from equity.
- ROA Score: 5, very favorable, demonstrating strong asset utilization by TSM.
- Debt To Equity Score: 3, moderate, indicating moderate financial risk.
- Overall Score: 4, favorable summary of TSM’s financial health and performance.
NVMI Rating
- Rating: B- reflecting a very favorable but lower assessment than TSM.
- Discounted Cash Flow Score: 3, moderate, indicating less attractive valuation.
- ROE Score: 4, favorable, indicating good but lower efficiency than TSM.
- ROA Score: 5, very favorable, same high score as TSM for asset efficiency.
- Debt To Equity Score: 1, very unfavorable, suggesting higher financial risk.
- Overall Score: 3, moderate overall rating reflecting lower financial strength.
Which one is the best rated?
Based strictly on the provided data, TSM is better rated overall with higher scores in discounted cash flow, ROE, and a more favorable overall score. NVMI lags particularly in debt-to-equity and overall score metrics.
Scores Comparison
Here is a comparison of the financial scores for Taiwan Semiconductor Manufacturing Company Limited (TSM) and Nova Ltd. (NVMI):
TSM Scores
- Altman Z-Score: 2.94, in the grey zone indicating moderate bankruptcy risk.
- Piotroski Score: 8, classified as very strong financial health.
NVMI Scores
- Altman Z-Score: 7.76, in the safe zone indicating low bankruptcy risk.
- Piotroski Score: 7, classified as strong financial health.
Which company has the best scores?
Based on the provided data, NVMI has a significantly higher Altman Z-Score, indicating lower bankruptcy risk than TSM. TSM has a slightly higher Piotroski Score, suggesting marginally stronger financial health. Overall, NVMI scores better on bankruptcy risk, while TSM scores better on financial strength.
Grades Comparison
Here is the grades comparison for Taiwan Semiconductor Manufacturing Company Limited and Nova Ltd.:
Taiwan Semiconductor Manufacturing Company Limited Grades
The following table summarizes recent grades assigned by reputable financial institutions:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Bernstein | Maintain | Outperform | 2025-12-08 |
| Needham | Maintain | Buy | 2025-10-27 |
| Barclays | Maintain | Overweight | 2025-10-17 |
| Needham | Maintain | Buy | 2025-10-16 |
| Susquehanna | Maintain | Positive | 2025-10-10 |
| Barclays | Maintain | Overweight | 2025-10-09 |
| Barclays | Maintain | Overweight | 2025-09-16 |
| Needham | Maintain | Buy | 2025-07-17 |
| Susquehanna | Maintain | Positive | 2025-07-14 |
| Needham | Maintain | Buy | 2025-07-01 |
Overall, Taiwan Semiconductor Manufacturing Company Limited’s grades show a consistent positive outlook, with multiple “Buy” and “Overweight” ratings maintained recently.
Nova Ltd. Grades
The following table presents recent grades from verified grading companies:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| B of A Securities | Maintain | Buy | 2026-01-13 |
| Jefferies | Maintain | Buy | 2025-12-15 |
| Evercore ISI Group | Maintain | Outperform | 2025-11-07 |
| Benchmark | Maintain | Buy | 2025-11-07 |
| Cantor Fitzgerald | Maintain | Overweight | 2025-06-24 |
| B of A Securities | Maintain | Buy | 2025-06-24 |
| Benchmark | Maintain | Buy | 2025-05-09 |
| Citigroup | Maintain | Buy | 2025-05-09 |
| B of A Securities | Maintain | Buy | 2025-04-16 |
| Cantor Fitzgerald | Maintain | Overweight | 2025-03-14 |
Nova Ltd.’s grades similarly indicate a steady positive consensus, with sustained “Buy” and “Outperform” ratings from multiple analysts.
Which company has the best grades?
Both Taiwan Semiconductor Manufacturing Company Limited and Nova Ltd. have received predominantly “Buy” and “Outperform” grades from reputable analysts, indicating strong investor confidence in both. Taiwan Semiconductor shows a larger volume of recent ratings, while Nova Ltd. maintains solid support with slightly fewer but consistent positive grades. Investors may interpret these strong and stable grades as indicators of favorable prospects, though further individual analysis is advisable.
Strengths and Weaknesses
Below is a comparative overview of key strengths and weaknesses of Taiwan Semiconductor Manufacturing Company Limited (TSM) and Nova Ltd. (NVMI) based on their recent performance and financial metrics.
| Criterion | Taiwan Semiconductor Manufacturing Company Limited (TSM) | Nova Ltd. (NVMI) |
|---|---|---|
| Diversification | Moderate: Primarily focused on wafer manufacturing; limited other products (TWD 380B in 2024) | Low: Single product line generating USD 538M in 2024 |
| Profitability | High: Net margin 40%, ROIC 20%, ROE 27.3%, creating value but with declining ROIC trend | Moderate: Net margin 27.3%, ROIC 13.4%, ROE 19.8%, shedding value but improving ROIC trend |
| Innovation | Strong: Leading-edge semiconductor tech with high capital efficiency | Emerging: Rapid ROIC growth indicates improving innovation and operational efficiency |
| Global presence | Extensive: Major global supplier with broad international client base | Limited: Smaller scale, focused market presence |
| Market Share | Large: Dominant player in semiconductor foundry market | Small: Niche player in specialized semiconductor products |
Key takeaways: TSM demonstrates strong profitability and global market leadership with a solid but slightly declining profitability trend. NVMI shows promising growth with improving returns but currently lacks a strong competitive moat and diversification. Investors should weigh TSM’s established position against NVMI’s growth potential and operational improvements.
Risk Analysis
Below is a comparative risk assessment table for Taiwan Semiconductor Manufacturing Company Limited (TSM) and Nova Ltd. (NVMI) based on the most recent data from 2024 and market conditions in 2026.
| Metric | Taiwan Semiconductor Manufacturing Company Limited (TSM) | Nova Ltd. (NVMI) |
|---|---|---|
| Market Risk | Beta 1.274, moderate volatility in semiconductor sector | Beta 1.832, higher volatility and sensitivity to market swings |
| Debt level | Debt-to-equity 0.25, favorable leverage | Debt-to-equity 0.25, but weaker debt score indicates higher risk |
| Regulatory Risk | Moderate, exposure to cross-border trade regulations | Moderate, with exposure to multiple international jurisdictions |
| Operational Risk | Large scale with 65K employees; complexity in global supply chain | Smaller company with 1.2K employees; operational risks tied to niche technology |
| Environmental Risk | Moderate, manufacturing impact and energy-intensive processes | Moderate, with focus on high-tech manufacturing metrology tools |
| Geopolitical Risk | High, due to Taiwan-China tensions affecting supply chain | Moderate, based in Israel with exposure to regional geopolitical issues |
In summary, TSM faces significant geopolitical risk stemming from Taiwan-China relations, which could impact its global supply chain. NVMI shows higher market volatility and financial risk due to weaker debt-related scores, despite a strong operational niche. Investors should weigh geopolitical factors heavily for TSM, while monitoring financial leverage and market swings closely for NVMI.
Which Stock to Choose?
Taiwan Semiconductor Manufacturing Company Limited (TSM) shows strong income growth with a 33.89% revenue increase in 2024 and favorable profitability metrics, including a 40.02% net margin. Its financial ratios are mostly favorable, reflecting solid returns on equity (27.29%) and invested capital (20.0%), supported by low debt levels and a very favorable A- rating.
Nova Ltd. (NVMI) reports robust income growth, with 29.83% revenue growth and a 27.33% net margin in 2024. Its financial ratios are largely favorable, though it carries a higher debt burden relative to equity, and has a very favorable B- rating. NVMI’s return on equity (19.81%) and invested capital (13.39%) are solid but trail TSM’s metrics.
For investors prioritizing stability and established profitability, TSM’s higher rating and strong income statement may appear more favorable. Conversely, those focused on growth opportunities might find NVMI’s improving profitability and accelerating income growth more appealing, despite its higher leverage and moderate rating.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of Taiwan Semiconductor Manufacturing Company Limited and Nova Ltd. to enhance your investment decisions:
