tsmc faces market uncertainty amid rumors and geopolitical issues
Taipei, Wednesday, 15 January 2025.
Rumors surrounding potential reductions in CoWoS orders by NVIDIA have stirred the market just before TSMC’s earnings release. These speculations have created a buzz, as they suggest a possible shift in demand, impacting TSMC’s outlook. The situation is further complicated by geopolitical tensions and new US export controls on AI chips, which could affect TSMC’s stock performance. Despite these uncertainties, some industry insiders claim no significant changes in CoWoS orders, highlighting the ongoing demand for advanced packaging technologies. As TSMC prepares to disclose its earnings, investors remain cautious, monitoring how these factors might influence TSMC’s future growth and market position. The outcome of these developments could have significant implications for the semiconductor industry, especially in the context of AI and technological advancements.
Conflicting signals on CoWoS demand
Market rumors about NVIDIA reducing CoWoS orders have triggered volatility in TSMC’s stock price, leading to a 3.36% drop in TSMC’s ADR [4]. However, key supply chain sources strongly deny these claims, with industry insiders stating they ‘haven’t heard of any order reductions’ [6]. In fact, TSMC continues to expand its CoWoS capacity, suggesting confidence in sustained demand [6]. The advanced packaging technology remains crucial for AI chip development [2].
New US export controls create uncertainty
The semiconductor landscape faces additional complexity with President Biden’s new AI chip export controls announced on January 13, 2025 [4]. The regulations establish a three-tier system, with Taiwan positioned in Tier 1, allowing unrestricted AI GPU purchases [4]. While this preferential status benefits TSMC, the broader implications of these controls, particularly regarding China-related business, have contributed to market uncertainty [4][1].
Market outlook and technological advancement
Despite market turbulence, TSMC’s technological trajectory remains strong. The company is advancing its manufacturing capabilities through three key strategies: transistor scaling, design-technology co-optimization, and advanced packaging [3]. Industry experts note a growing divergence between advanced and mature process demands, with particularly strong orders in advanced nodes [3]. This technological leadership positions TSMC well for continued growth in AI-related manufacturing [2].