(Bloomberg) — Excitement over artificial intelligence is outweighing geopolitical concerns for Taiwan Semiconductor Manufacturing Co., which is fueling a record stock price rise.
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Supporting TSMC’s claim that AI will be its biggest growth driver this year, foreign investor ownership has reached a two-year high. According to Pictet Asset Management, the company has a more than 90% share in the manufacturing of advanced semiconductors used in AI.
Last year’s turnaround (the stock had plunged 27% in 2022) came after Warren Buffett sold his $5 billion stake in TSMC, citing geopolitical tensions as the reason for its location. Adding to the concerns, the self-governing island has elected pro-U.S. President Lai Qingde, bringing to power a man described by the Chinese government as a “war instigator.”
“Geopolitics has historically been recognized as a risk in this sector, but the strategic nature of these products and the desire to build local supply chains will “This means that geopolitics is definitely a tailwind for this sector.” O’Connor Global Multi-Strategy Alpha. “We are still in the early stages of semiconductor upcycling.”
The main concerns about TSMC center on its concentration of chip manufacturing in Taiwan. The island produces much of the world’s most advanced logic semiconductors, and any military escalation with China across the strait would be a major blow to global supply chains.
In addition to its superiority in advanced chips, Pictet claims it has more than a 50% share of the overall foundry market. Pictet senior client portfolio manager Anjali Bastianpillai said this puts the company on track to meet or exceed its long-term goal of 15-20% growth.
The company’s sales rose 9.4% in the first two months, as demand accelerated due to increased AI activity and offset weak iPhone sales. TSMC’s stock price has more than doubled since its October 2022 lows, helped in part by gains in major customer Nvidia. It rose 1.5% on Monday, extending its year-to-date rise to 29%.
In response to market concerns, the company is diversifying its business locations. TSMC has announced plans to build a second manufacturing plant in Japan, with the Kumamoto plant scheduled to begin production this year. The company is also building two advanced facilities in Arizona and one factory in Germany.
Gary Tan, Portfolio Manager at AllSpring Intrinsic Emerging, said: “Despite geopolitical concerns, TSMC is “This is a fundamental building block for achieving a broader recovery in AI exposure and semiconductors.” Stocks on the market.
(TSMC stock price trend updated on Monday.)
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