Taiwanese chipmaker Taiwan Semiconductor Manufacturing Co Ltd (TSMC) provided a bullish outlook on its future prospects, driven by the growing demand for high-end chips used in artificial intelligence (AI). This development has sent shockwaves through the Asian stock markets and has reaffirmed TSMC’s position as a global industry leader.
TSMC’s positive projections
TSMC, the world’s largest contract chipmaker and a significant supplier to tech giants Apple Inc and Nvidia, recently announced its optimistic outlook for 2024. The company foresees over 20% revenue growth in the upcoming year, primarily due to the surging demand for advanced chips used in AI applications. This announcement has sent ripples of enthusiasm through both domestic and international investors.
Stock soars in Taiwan and the US
Following TSMC’s announcement, its shares listed on the Taipei stock exchange soared by 6.5% in a single day. This surge in value solidified TSMC’s status as Asia’s most valuable listed company, with a market capitalization of approximately $512 billion. Simultaneously, TSMC’s U.S. listed stocks witnessed remarkable growth, closing nearly 10% higher. This surge in value had a cascading effect, with the S&P 500 nearing record highs, thanks to heightened AI optimism benefiting not only TSMC but also other chipmakers such as Nvidia.
Asian stock markets rejoice
TSMC’s positive outlook did not only benefit its own shares but also had a significant impact on the broader Asian stock markets. The Taipei stock market experienced its most substantial percentage rise in a year, concluding the day with a 2.6% gain. Foreign investors flocked to invest in Taiwanese stocks, injecting a net T$80.2 billion ($2.55 billion), marking the second-highest figure on record. This surge in investor confidence was not limited to TSMC alone, as other Taiwanese tech companies, including AI server and component manufacturers Quanta and Wistron, witnessed significant jumps of 8.4% and 9.5%, respectively.
Taiwan’s currency gains momentum
The positive sentiment extended to Taiwan’s currency as well. The Taiwan dollar gained ground against other currencies as investor focus shifted from post-election turbulence to the promising outlook presented by TSMC. Notably, Taiwan’s ruling Democratic Progressive Party won the presidential election but lost its majority in parliament.
TSMC’s domestic expansion plans
TSMC’s announcement of evaluating the construction of a third fabrication facility (fab) in southern Taiwan’s Kaohsiung city to produce advanced 2-nanometer chips has been met with enthusiasm from the government and stakeholders. This move aims to address concerns that TSMC has been building fabs overseas and undermining the domestic semiconductor industry. Opposition politicians have voiced apprehensions, suggesting that Taiwan is a risky location for expanding production due to tensions with China.
Economy Minister Wang Mei-hua dispelled such concerns, emphasizing that TSMC’s commitment to domestic expansion underscores the strength of the semiconductor industry in Taiwan. “Investment in Taiwan will definitely increase,” she affirmed. TSMC, in collaboration with the government, has consistently asserted that the production of the most advanced chips will continue to be rooted in Taiwan.
Taiwan’s “Sacred Mountain”
TSMC plays a pivotal role in Taiwan’s trade-dependent economy. It is often referred to as “the sacred mountain protecting the country” due to its significant contributions across various sectors, from smartphones to automobiles, AI, and even quantum computing applications. The company’s success is not only critical for its shareholders but also for the entire nation.
Kaohsiung Mayor Chen Chi-mai emphasized the city’s commitment to providing stable and reliable infrastructure, such as water and power supplies, to support TSMC’s factories. He underlined TSMC’s continued focus on Taiwan as a key strategy for the company’s growth and success.
TSMC’s optimistic outlook and its commitment to expanding domestic production have injected renewed confidence into the Asian stock markets, reaffirming Taiwan’s position as a global hub for cutting-edge semiconductor technology. As TSMC continues to drive innovation and meet the surging demand for high-end chips in AI and other advanced technologies, the future appears brighter than ever for both the company and the nation.
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