TSMC (NYSE:TSM) Rally Sends Taiwan’s TAIEX to Stratosphere

Jul 27
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The Monday trading day was a record one for Taiwan Semiconductor Manufacturing Company NYSE:TSM,TPE:2330 as the company's stock surged on Taiwan's TAIEX on news that Intel NASDAQ:INTC may be partially abandoning its manufacturing efforts and turning to TSMC's fabs. 

NYSE:TSM stock rise

Samsung Has Reportedly Lost Qualcomm Snapdragon X60, Snapdragon 875 Orders to TSMC Due to 5nm Production Difficulties

TSMC blew past its 10% daily limit within hours of the opening bell in Taipei, bringing up the TAIEX — of which it makes up roughly 23% by weight — by 2.3% by the end of the Monday trading day. The $35 billion addition to its market capitalization makes TSMC the 12th most valuable stock worldwide.

TSMC (NYSE: TSM) Helps Taiwan's Market Recover From the Covid Recession

Overall the TAIEX is up approximately 45% since the lows of March, when markets around the world retreated as pandemic panic set in.

 

With a percieved drop in demand for consumer goods, markets in Taiwan dropped by nearly a quarter during the month following global trends.

TSMC (NYSE:TSM) Now One of World’s Top-10 Stocks

This recent rally brings the TAIEX back above its 1990 high of 12,000 points. The market closed above 12,000 during the last trading days of 2019, as Taiwan's pre-Covid economy ended the year a trade war winner. Throughout 2019 it was one of the few countries in the world that continually upgraded its growth forecast throughout the year as many of its peer states stared at recessions. Although many thought independence-minded Tsai Ing-wen and the DPP would worsen Taiwan's economic outlook, as relations with China have soured since her election, the TAIEX has risen 50% since her inauguration in 2016.

TSMC (NYSE: TSM) Has No Need for Huawei

When TSMC reported double-digit revenue growth in early July, many assumed that the reason for such impressive revenue growth was Huawei buying up all the capacity it could handle in order to ensure adequate supply before the 'Kill Order' the US placed in Huawei's TSMC orders came into place.

As Wccftech reported earlier this month, analyst research from Credit Suisse laid out a number of scenarios where TSMC grows its revenue even with the hole in its order book that Huawei once occupied. At the time, Credit Suisse believed that MediaTek TPE:2454 and Qualcomm NASDAQ:QCOM would take the lion's share of extra capacity.

However, analysts never have a crystal ball: the models from Credit Suisse didn't incorporate Intel's follies and need to find an external manufacturing partner. For those that watch the semiconductor foundry space closely, Intel confirming that it's looking for an external foundry partner isn't exactly a surprise. Something like this has been in the works for a while. But what might be surprising is just how positively the market reacted to the news.

 

 

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