AI frenzy takes Taiwan's TSMC to record peak, puts it in trillion dollar club
SINGAPORE, July 11 (Reuters) -Taiwan's TSMC 2330.TW scaled a record high on Thursday after posting strong second-quarter revenue on booming demand for AI applications, cementing its position as Asia's most valuable company.
TSMC also topped a trillion dollar market value this week.
WHY IT'S IMPORTANT
The AI frenzy has sparked a rally in chipmaker stocks across the globe. Taiwan Semiconductor Manufacturing Co (TSMC), the world's largest contract chipmaker, whose customers include AI poster child Nvidia NVDA.O, has especially benefited from the soaring demand for AI-capable chips.
Foreign investors have poured $4.8 billion so far this year into Taiwan's stock market, which is dominated by TSMC. Asian funds, however, according to HSBC, still remain underweight on Taiwan, suggesting there could be room for further inflow.
BY THE NUMBERS
Shares of TSMC, whose customers also include Apple AAPL.O, have jumped nearly 80% this year, widely outperforming the benchmark Taiwan SE Weighted Index .TWII, which is up 35%.
On Thursday, TSMC's Taipei-listed shares rose more than 2% to a record T$1,080, taking the company's market value to T$28 trillion ($861 billion) and making it Asia's most valuable publicly listed company.
TSMC's ADRs TSM.N, first listed on the NYSE in 1997, jumped 4.8% to a record $192.79 on Monday, briefly boosting the firm's market value to $1 trillion. On Wednesday, the ADRs closed at $191.05.
TSMC is due to report its full second-quarter earnings on July 18.
CONTEXT
AI-focused companies, mostly chipmakers, have had a good run this year and saw big gains in market capitalization in June.
Nvidia NVDA.O briefly overtook Microsoft MSFT.O last month to become the world's most valuable company. Nvidia, Microsoft and Apple all have market values above $3 trillion.
TSMC's strong results lifted global chip stocks, with the Philadelphia semiconductor index .SOX rising 2.4% to a record on Wednesday.
QUOTE
"Optimism continues to grow around AI-related demand and potential pricing powers, as TSMC's position as leading foundry supplier should elevate earnings in 2025," said Daniel Tan, portfolio manager at Singapore-based Grasshopper Asset Management.
"In an industry facing increasing tight supply, TSMC's value has to appreciate further in 2025 as customers bid to get sufficient capacity allocation."
($1 = 32.5490 Taiwan dollars)
TSMC shares surge 80% so far in 2024, outpacing broader markets https://tmsnrt.rs/3Lkv8HG
Reporting by Ankur Banerjee and Rae Wee in Singapore; Editing by Vidya Ranganathan and Tom Hogue
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