AI frenzy takes Taiwan's TSMC to record peak, puts it in trillion dollar club


FILE PHOTO: Taiwan Semiconductor Manufacturing Company's (TSMC) logo is seen while people attend the opening of the TSMC global R&D center in Hsinchu, Taiwan July 28, 2023. REUTERS/Ann Wang/File Photo

SINGAPORE (Reuters) - Taiwan's TSMC 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, 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, have jumped nearly 80% this year, widely outperforming the benchmark Taiwan SE Weighted Index, 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, 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 briefly overtook Microsoft 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 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)

(Reporting by Ankur Banerjee and Rae Wee in Singapore; Editing by Vidya Ranganathan and Tom Hogue)

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