Arm vs. Taiwan Semiconductor Manufacturing: Which Chip Stock Is a Better Buy in 2026?
Key PointsArm designs the blueprints for nearly all smartphone chips, capturing royalties on every device sold.
In 2026, investors are considering two major chip stocks: Arm (NASDAQ:ARM) and Taiwan Semiconductor Manufacturing (NYSE:TSM). Arm develops the intellectual property for chip design, while TSM physically manufactures these chips. Both companies stand to gain from the growing demand for artificial intelligence, but they differ in their business models and financials, presenting varying risks and rewards for retail investors.
Arm manufactures central processing units (CPUs) and compute platforms, licensing this technology to numerous leading semiconductor companies. Its latest annual report, submitted for the fiscal year concluding March 31, 2026, indicates that its energy-efficient designs are utilized in over 99% of smartphones sold worldwide. The company does not disclose specific information on customer concentration in its most recent filing, although it operates across a broad spectrum of markets.
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