Taiwan Semiconductor Manufacturing Co. (TSM) Remains Unfazed by Trump’s Election Win
Despite Donald Trump’s recent election victory and his past criticisms of Taiwan’s semiconductor industry, Taiwan Semiconductor Manufacturing Co. (TSM) has reaffirmed its commitment to its substantial $65 billion investment in advanced semiconductor production facilities in Arizona. This decision comes amidst speculation about potential policy shifts under a Trump administration, particularly concerning the Chips Act, a key piece of legislation designed to bolster domestic semiconductor manufacturing in the United States. TSM’s unwavering stance underscores the company’s long-term strategy and the critical role it plays in the global semiconductor landscape, supplying giants like Apple (AAPL) and Nvidia (NVDA). This move also highlights the enduring demand for advanced chips despite geopolitical uncertainty.
Key Takeaways:
- TSMC’s $65 billion US investment remains unaffected by Donald Trump’s election win, defying predictions of potential policy changes.
- Trump’s criticism of the Chips Act and his suggestion of tariffs instead of subsidies continues to be a point of contention.
- TSMC’s strong Q3 results, exceeding expectations, showcase robust demand for its advanced 3nm and 5nm technologies, primarily driven by smartphone and AI applications.
- TSMC is halting advanced chip orders to mainland China, effective next week, impacting customers using 7nm technology or smaller in response to US export curbs.
- Despite geopolitical headwinds, TSMC’s stock price remains resilient showing a significant year-to-date gain.
TSMC’s Arizona Investment Remains On Track
The ongoing construction of TSMC’s Arizona facilities represents a significant commitment to expanding its presence in the United States. This investment is vital not only for TSMC, but for the US government’s efforts to reduce its reliance on foreign chipmakers. The project, totaling a staggering $65 billion, is expected to create thousands of high-skilled jobs and boost the American semiconductor industry. The decision to proceed with the project, despite Trump’s past pronouncements, suggests TSMC is confident in the long-term viability of its investment and the continuing demand for its advanced chips produced in the US. This decision could indirectly send a message of stable economic conditions to its investors and stakeholders.
Trump’s stance on the Chips Act
Trump’s vocal opposition to the Chips Act, which provides significant financial incentives to semiconductor manufacturers to build facilities in the US, casts a shadow over the future of government support for such endeavors. He has openly criticized the Act, calling it “a poor strategy” and advocating for tariffs instead. Whether his administration will change the funding and incentives offered by the Act remains uncertain, but TSMC’s continued investment suggests the company believes that the benefits of the existing incentives outweigh the potential risks of policy changes.
Strong Q3 Results Highlight Robust Demand
TSMC’s recently reported fiscal third-quarter revenue of NT$759.69 billion ($23.50 billion) significantly exceeded analysts’ expectations and its own guidance range. This outstanding performance highlights the strong global demand for advanced semiconductor technology, driven in large part by the rapid growth of the smartphone and artificial intelligence (AI) markets. The third-quarter results show a 39% increase from the previous year, further cementing the company’s position as a key player in the global semiconductor industry.
Apple’s influence on TSMC’s success
According to Needham’s analyst Charles Shi, Apple played a significant role in TSMC’s impressive third-quarter results, particularly through its adoption of TSMC’s advanced 3nm technology. The strong demand from Apple, as a major customer, underscores the importance of strategic partnerships in the semiconductor sector. The success of these innovative chips used in Apple products clearly demonstrates the market’s appetite for such cutting-edge technology.
Geopolitical Impact: Restrictions on Mainland China
In a notable development, TSMC has reportedly informed its Chinese clients that it will cease production of advanced chips for them, effectively cutting off access to its 7nm technology and below. This decision follows the intensification of US efforts to restrict China’s access to advanced chip technology, driven by national security concerns. This move is likely to impact numerous industries reliant on TSMC’s cutting-edge chips. Although Mainland China previously accounted for 11% of TSMC’s third-quarter revenue, a significant portion of its revenue comes from North America which accounted for 71%, this decision could likely be viewed as a strategic move to maintain its standing against growing geo-political tensions.
TSMC Stock Performance and Future Outlook
Despite the uncertainties surrounding Trump’s election and his past criticisms of the semiconductor industry, TSMC’s stock has shown remarkable resilience, gaining **over 98% year-to-date**. This strong performance underscores investor confidence in the company’s long-term prospects and its ability to navigate the complex geopolitical landscape. The company’s positive fourth-quarter guidance, which projects revenue exceeding analysts’ expectations, further reinforces this positive outlook. The pre-market surge in TSMC’s stock price further emphasizes the market’s continued confidence in the company’s future, suggesting investors feel the positive momentum will continue despite Trump’s potential impact on the semiconductor sector.
In conclusion, TSMC’s unwavering commitment to its US investment, coupled with its strong financial performance and strategic decisions, shows that this semiconductor giant is extremely well-positioned for continued growth and success in the face of both technological advancements and geopolitical uncertainties.
