TSMC was once considered a "cyclical stock" by the market in its early years.

The reason is simple: semiconductor manufacturing is a heavy asset industry, with full capacity and skyrocketing profits during good times; during downturns, capacity utilization drops and depreciation pressures increase, so valuation logic has long revolved around inventory cycles, capital expenditures, and capacity utilization.
But TSMC later completed three upgrades.
First, from a "wafer foundry" to a "global fabless manufacturing platform." It does not compete with its clients, so Apple, Nvidia, AMD, Qualcomm, MediaTek, and others are willing to entrust it with their most core chips.
Second, from "contract manufacturing services" to "monopoly on advanced process nodes." After 7nm, 5nm, and 3nm, competition is no longer just about building factories, but about yield, ecosystem, customer collaboration, and capital efficiency.
Third, from a "consumer electronics supply chain" to "AI computing infrastructure." AI chips not only require advanced processes but also advanced packaging like CoWoS, making TSMC increasingly resemble the core toll station of the global computing power industry chain.
Therefore, TSMC is not without cycles, but on top of cycles, it has layered even stronger structural growth.
What it has truly achieved is not "cyclical stocks turning into growth stocks," but transforming the fluctuations within cyclical industries into long-term compounding of a technological platform.
Please substitute the current three major memory manufacturers yourself.