tsmc stock beats US giants with unexpected surge

2024-12-07 tsmc

Taiwan, Saturday, 7 December 2024.
Taiwan Semiconductor Manufacturing Company (TSMC) has surprised the market with a notable stock performance, closing with a 1.8% increase at $204.30. This gain outpaced major U.S. indices such as the S&P 500, Dow Jones, and Nasdaq. Analysts attribute this rise to strong demand forecasts for TSMC’s chips and positive long-term growth prospects. As the world’s largest semiconductor foundry, TSMC continues to solidify its position in the global market. The current sentiment suggests that the company’s focus on cutting-edge technology and its strategic investments are driving investor confidence. This performance highlights TSMC’s resilience and potential in the volatile semiconductor industry. Investors are keenly watching how TSMC leverages these opportunities amid geopolitical tensions and competitive pressures.

Market dominance and global impact

TSMC’s strong market position is underpinned by its commanding 60% share of global chip foundry spending [5]. The company’s significance extends beyond manufacturing, as it constitutes approximately 30% of the Taiwan Stock Exchange’s main index [3]. Recent performance reflects TSMC’s crucial role in Taiwan’s economy, where integrated circuit exports reached $184 billion in 2022, accounting for nearly 25% of the country’s GDP [3].

Strategic expansion and government support

The company’s growth trajectory is bolstered by significant U.S. government support, with a recently finalized $6.6 billion subsidy for its Phoenix, Arizona operations [5]. This marks a major milestone under the CHIPS Act, supporting TSMC’s strategic diversification of manufacturing locations. The Arizona facility, set to open by the end of 2024, will produce 20,000 wafers monthly using advanced 5nm technology, later transitioning to 3nm processes [3].

Innovation and future outlook

TSMC’s forward momentum is driven by its technological leadership and expansion plans. The company is preparing to commence production of 2-nanometer chips in 2025 [3], while its partnership with major tech giants continues to strengthen. A recent agreement with ARM for developing 10nm FinFET processors [3] demonstrates TSMC’s commitment to advancing semiconductor technology. The company’s capital expenditure budget for 2024 is set at $32 billion, with up to 80% allocated to advanced process technologies [5].

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