Taiwan Stocks Surge 40% as AI Boom, Tariff Exemptions Boost TSM

The stock market in China Taiwan has been surging, driven by the dual benefits of the artificial intelligence (AI) boom and tariff exemptions. The Taiwan Weighted Index approached its historical high, buoyed by the strong performance of Taiwan Semiconductor Manufacturing Company (TSM.US), the world's largest dedicated independent semiconductor foundry and a key supplier to NVIDIA.

The rally was accelerated by the U.S. government's announcement in early August that it would exempt certain companies, including TSM, from the previously announced 100% chip tariffs. This move has significantly boosted investor confidence, particularly in the AI sector. TSM's stock price has been a major contributor to the index's gains, which have accumulated to approximately 40% since the April low.

TSM's recent financial performance has been impressive. The company reported better-than-expected earnings for the June quarter and raised its revenue growth forecast for 2025. TSM now expects its dollar-denominated sales to grow by around 30% this year, up from the previous mid-20% range. The company also anticipates strong revenue growth in the third quarter, with projections ranging from $31.8 billion to $33 billion, a significant increase from the $23.5 billion reported in the same period last year and the $30 billion from the previous quarter.

The company's July revenue reached a record high of NT$323.2 billion (approximately $10.8 billion), marking a 26% year-over-year increase. This growth trend underscores the accelerating investment in the AI sector. As a critical node in the global semiconductor supply chain, China Taiwan is benefiting from the intense competition among top global tech companies to develop cutting-edge AI models.

Despite facing currency appreciation pressures from the New Taiwan dollar, TSM has maintained robust growth. From January to July, the company's cumulative revenue grew by 38% compared to the same period last year. TSM is actively expanding its production capacity to meet the surging market demand.

On Wednesday, TSM's stock price rose by 1.7%, hovering near its historical high. The company's strong performance, along with contributions from other major suppliers, has been a key driver of the index's gains.