Is TSM (Taiwan Semiconductor Manufacturing Company Limited) Halal or Haram?

Based on our AAOIFI-standard shariah screening, TSM is Not Halal (Haram) and is not considered permissible for Muslim investors. It failed 2 of 4 compliance screens. Its debt-to-market-cap ratio of 49.20% exceeds the ≤33% threshold. Its cash & securities ratio of 152.01% exceeds the ≤33% threshold.

Taiwan Semiconductor Manufacturing Company (TSMC) is the world's largest dedicated semiconductor foundry, acting as the manufacturing engine for major tech giants like Apple, NVIDIA, and AMD. The company specializes in advanced wafer fabrication processes, producing critical components like CMOS logic and mixed-signal chips that power everything from smartphones to high-performance servers. Its dominance in the industry is defined by its ability to manufacture the smallest, most efficient nodes at massive scale. For Muslim investors, TSMC presents a significant challenge because, despite its permissible business model, the stock is currently classified as Not Halal (Haram) under AAOIFI standards. While the company's revenue generation from chip manufacturing is compliant, it fails two critical financial ratios: its interest-bearing debt and its cash holdings relative to market capitalization are far too high. This means that investing in TSM would currently violate the financial health requirements set by shariah scholars. Financially, the primary red flags are the Debt-to-Market Cap ratio of 49.2% and a massive Cash & Securities-to-Market Cap ratio of 152.0 %, both well above the 33% limit. This indicates that a huge portion of the company's value is derived from liquid assets and debt structures rather than tangible operational assets, which is problematic in Islamic finance. However, it is worth noting that the Interest Income-to-Revenue ratio remains low at 2.45%, suggesting the core business operations themselves are not heavily reliant on haram income streams. Investors interested in the semiconductor sector should monitor TSMC's balance sheet closely in future quarters. If the company reduces its debt load or deploys its massive cash reserves into physical assets and expansion, these ratios could shift back towards compliance. Until then, strict adherence to AAOIFI standards requires avoiding this stock. Taiwan Semiconductor Manufacturing Company Limited operates in the Technology sector under the Semiconductors industry and is headquartered in Hsinchu City, TW. The company is led by CEO C. C. Wei and employs approximately 65,152 people.

TSM was screened using AAOIFI-based shariah compliance criteria. Four tests are applied: (1) Business Activity — the company's core business must not derive primary income from haram (prohibited) activities such as alcohol, gambling, tobacco, or interest-based finance. (2) Debt-to-Market-Cap — total debt must not exceed 33% of market capitalization. (3) Interest Income — interest income must not exceed 5% of total revenue. (4) Cash & Securities — cash and interest-bearing securities must not exceed 33% of market cap. TSM passed 2 of these 4 screens.

TSM was last screened on 2026-02-25. Shariah compliance status can change as companies report new financial data, acquire new businesses, or shift revenue streams. We recommend checking back periodically for the most up-to-date screening results.