Buffett's $5 billion purchase of TSMC is part of a wave of optimistic calls.In the most recent quarter, the company saw a $5 billion investment from Warren Buffett's conglomerate, at which time the stock had lost almost $250 billion. Market analysts credit the purchase to TSMC's low valuations, technological leadership, and strong fundamentals even though the company hasn't officially commented on the sale.After a volatile era highlighted by decreasing demand and US-China tensions, Berkshire's purchase, combined with a similar action by Tiger Global Management LLC, may indicate that value is beginning to emerge in the semiconductor business. Wall Street banks have increased their optimistic predictions for TSMC, with Morgan Stanley analysts stating that the company has hit "a favorable entry opportunity."If you can see past the present semiconductor downcycle, TSMC is a solid value option in the long run, according to Andy Wong, fund manager at LW Asset Management. With the growing need for IoT, renewable energy, and vehicles, "Buffett might be investing on the next-decade boom."Since Berkshire's acquisition was made public last week, TSMC's shares in Taiwan have increased by roughly 10%. According to a Nov. 8 report from Morgan Stanley, they are currently selling at a 30% to 40% discount to their downcycle valuation because of geopolitical risks.According to data gathered by Bloomberg, the stock has a value multiple of around 12.6 times based on its anticipated profits for the upcoming year. That is thought to be the lower end of the 10-year average by Goldman Sachs Group Inc. The firm is more affordable than the majority of the companies in the largest US-listed semiconductor index, the Philadelphia Stock Exchange Semiconductor Index.Given its strong execution, Goldman analysts predicted that TSMC will continue to demonstrate its resilience in comparison to its competitors during the industry downturn in a note published on November 16. The business is best positioned to take advantage of the industry's long-term structural growth in 5G, artificial intelligence, high-performance computing, and electric cars, they said, and valuations are favorable.Money FlowIn spite of the industry slump, TSMC was nevertheless able to produce double-digit revenue growth and a gross margin well above 50% this year. It has helped the company beat peers like Micron Technology Inc. and SK Hynix Inc. by capping its year-to-date loss at 21%.According to experts, the Taiwanese company's track record of strong cash flow and consistent payouts may have also contributed to Buffett's interest.According to Phelix Lee, equities analyst at Morningstar Asia Ltd., "TSMC (and other foundries) all have to incur high capital expenditure in the quest for tech/capacity supremacy, but history shows TSMC has managed to create decent cash flows despite expenditures." Since the 2000s, the corporation has a history of paying dividends, he continued.According to statistics gathered by Bloomberg, the stock's most recent dividend yield is 2.6%, which is greater than Micron's 0.8% and nearly equal to SK Hynix's.Despite the fact that Buffett's wager has improved retail sentiment toward the company, geopolitical threats and changes in the semiconductor industry's inventory might cause short-term fluctuations in the shares.As the US and China compete for dominance in the global technology economy, the semiconductor industry is at the core of a widening split between the two countries. To prevent high-end processors from falling into the hands of the Chinese military, Washington has increased restrictions on products made for Chinese consumers.Since February, analysts have decreased their average target price for TSMC's shares by nearly 30% to reflect the risks. In accordance with the decline recorded by the benchmark for worldwide semiconductors, its shares listed in the US are down more than 30% this year.According to Jason Su, fund manager of Cathay Taiwan 5G Plus Communications ETF, "Investors are concerned by higher-than-usual inventories, which shows no indications of relaxing yet." He said that when inventory corrections are finished, semiconductor supplies are expected to rise once again. "Companies like TSMC stated previously they expect inventory correction to continue through first half next year."