TSMC Stock Soars in AI Rally... Taiwan Stock Market Hits Intraday High

Surge in Semiconductor Demand Expected Amid AI Boom
Apple's Large-Scale Advanced Packaging Contract Impact

The stock price of Taiwan's TSMC, the world's largest foundry (semiconductor contract manufacturing) company, surged nearly 10% intraday. This was driven by the AI (artificial intelligence) boom, which is expected to cause a sharp increase in semiconductor demand, as well as the good news of securing a large-scale advanced packaging contract with Apple. The Taiwan stock market benchmark, the TAIEX index, also soared to an all-time intraday high, buoyed by AI optimism.

[Image source=Reuters Yonhap News]

On the 15th, when the Taiwan stock market reopened after the Lunar New Year holiday, TSMC's stock price surged as much as 9.8% intraday compared to the previous close. This was the largest intraday gain since July 2020. This upward trend is analyzed to be due to the global confirmation of the strong semiconductor stock momentum fueled by the recent AI rally. Earlier, in the New York stock market, Nvidia's market capitalization surpassed Google Alphabet to secure a spot among the 'Big 3,' and investment bank Morgan Stanley raised Nvidia's target price, citing increasing demand for AI-dedicated chips.

Bloomberg reported, "As investors flock to AI-related stocks, chip manufacturers and other technology companies worldwide are experiencing rising stock prices." In particular, TSMC, which manufactures Nvidia's AI chips, is considered a representative beneficiary of the AI rally. TSMC's management met last month with Nvidia CEO Jensen Huang to discuss AI semiconductor supply issues. Morgan Stanley forecasted in a report that the proportion of AI semiconductors in TSMC's total sales could expand to 15% this year.

Last week, TSMC announced that its January sales increased by 7.9% year-on-year, which also raised expectations for expanding semiconductor demand. The report evaluated this as a recent signal showing the recovery of global consumer electronics demand. Good news also came from major clients such as Apple. Taiwan media, including United Daily News, cited sources on the day reporting that TSMC signed a large-scale order contract with Apple not only for 3nm (nanometer, one billionth of a meter) products but also for advanced packaging products. Reports also emerged that TSMC is accelerating the expansion of its 3nm process capacity, supported by the increase in customer orders.

Shinyao Ng, Asia equities investment director at global investment firm Aberdeen, said, "Taiwan is being led by technology stocks, especially the AI theme," and evaluated, "Nvidia acted as a catalyst amplifying this atmosphere after CEO Jensen Huang visited Taiwan."

On the same day, buoyed by TSMC's rally, the Taiwan stock market also hit an all-time intraday high. The TAIEX index jumped as much as 3.5% intraday, surpassing the highest level recorded in January 2022. The Taiwan stock market was closed from the 6th to the 14th due to the holiday.