tsmc adr jumps amid new us sanctions on china

2024-12-24 tsmc

Hsinchu, Tuesday, 24 December 2024.
Taiwan Semiconductor Manufacturing Company’s (TSMC) American Depositary Receipts (ADRs) increased by 5% after the US announced sanctions on China’s mature manufacturing processes. These sanctions could significantly alter the competitive landscape of the semiconductor industry. The measures are intended to limit China’s access to critical technologies and could result in a shift in TSMC’s stock trajectory. The US sanctions are part of a broader strategy to curb China’s technological advancements. This geopolitical move highlights ongoing tensions between the US and China in the tech sector.

Market reaction and strategic implications

The 5% surge in TSMC’s ADR [1] reflects investor confidence in the company’s position amid escalating US-China tensions. The Biden administration’s latest regulations target China’s acquisition of advanced AI chips through third-party nations, particularly focusing on Southeast Asian countries like Singapore and Malaysia [4]. This move comes as US officials estimate China could supply up to 50% of new global capacity for mature process chips within three to five years, with prices 30-50% below US levels [4].

Critical infrastructure concerns

TSMC’s strategic importance is underscored by its dominant market position, supplying 92% of leading-edge chips to the US [2]. Commerce Secretary Gina Raimondo emphasizes innovation as the key strategy, stating ‘The only way to beat China is to stay ahead of them’ [3]. The US government’s approach combines sanctions with domestic investment through the CHIPS Act, which allocated $11.6 billion to TSMC for its Arizona facility [2].

Political transition and policy uncertainty

The upcoming transition to the Trump administration on January 20, 2025 [3] creates uncertainty for semiconductor policies. Trump has criticized the CHIPS Act, advocating instead for high tariffs on foreign chip manufacturers [2]. His administration plans to implement an additional 10% tariff on top of an existing 25% tariff on Chinese imports [6]. This policy shift could significantly impact TSMC’s operations and global semiconductor supply chains.

Bronnen

TSMC Sanctions