Sometimes the market misprices a stock and investors need to take advantage of it before the market corrects itself. Taiwan Semiconductor (NYSE: TSM) falls under this category right now, as it's down around 12% from its all-time high despite reporting incredible results.

Before investors rush in to take advantage of the mispricing, it's wise to understand how it got that way in the first place. After knowing why TSMC experienced the drop, it'll be obvious why the 12% discount is a buying opportunity.

Taiwan Semiconductor, or TSMC, is the leading contract semiconductor manufacturing facility. Essentially, it has the technology and resources to produce the world's smallest and most powerful chips. Its clients, including Apple and Nvidia, design their chips and then give those designs to TSMC to manufacture. This places TSMC in an excellent position, as it's just a fabricator that sometimes produces chips for two competing companies.

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Source Fool.com