TSMC's Meteoric Rise: Surging Shares, AI Demand, and U.S. Scrutiny Shape Future Prospects

As of last week, Taiwan Semiconductor Manufacturing Company (TSMC) saw its shares increase by 1.42%, marking a 6.89% gain over the week and a remarkable 49.53% rise year-to-date. The company's latest market capitalization stands at approximately 1515.45 billion USD.

Recently, TSMC refuted reports suggesting that Intel sought investment or cooperation with the semiconductor giant. TSMC confirmed that it has not engaged in any discussions regarding joint ventures or technology transfers, aligning with previous remarks by Chairman Mark Liu when queried about potential collaborations with Intel.

In other developments, TSMC is poised to report its third-quarter financial results and future outlook at an upcoming conference on October 16. Buoyed by the insatiable demand for advanced process technology, TSMC is expected to surpass its revenue forecasts for Q3 and potentially set new records in Q4, paving the way for annual revenue growth to exceed the initially projected 30% increase.

The robust demand for AI applications continues to drive advanced process technology requirements, notably from Apple's latest devices and NVIDIA's new AI chips. TSMC's Q4 revenue could match or slightly exceed Q3 figures, further supporting annual revenue growth beyond expectations.

Chairman Mark Liu previously highlighted TSMC's collaboration with AI innovators, acknowledging the relentless demand for AI applications and the company's efforts to expand capacity to meet client needs. The expected average revenue for Q3 is around 32.4 billion USD, continuing to surpass 30 billion USD, with steady increases anticipated in the latter half of the year.

Looking ahead, TSMC is predicted to substantially exceed its previous growth targets, potentially reaching nearly a 40% increase in revenue by 2025. This growth is further supported by the planned introduction of 2nm technology, which will contribute significantly to revenues in 2026 and beyond, with 3nm customer orders being a critical factor for TSMC's revenue and profit expansion.

However, TSMC's dominant position in the global advanced chip manufacturing industry has drawn scrutiny from the U.S. government. Concerns over supply chain security have been raised, with calls for the U.S. to reclaim a 50% share of advanced process capacity. While TSMC has committed 165 billion USD to build advanced process facilities in the U.S., including 5nm to 3nm technologies, the latest demand potentially forces TSMC to transfer its most advanced technologies, like the upcoming 2nm process, to the U.S.

As TSMC navigates these challenges, the upcoming conference is expected to address these strategic concerns and clarify the company's stance on meeting or resisting U.S. demands for a more balanced distribution of semiconductor manufacturing capacity.