TSMC Soars Over 6% as AI Demand Fuels New Stock Highs

In the wave of rapid global technological advancement, Taiwan Semiconductor Manufacturing Company (TSMC) has again caught the spotlight as its stock price surged by over 6% in early U.S. market trading, reaching a new high. This trend is not only capturing the attention of investors but also reflects the underlying market demand, especially in the realm of Artificial Intelligence (AI) technological innovation, which is energizing the entire semiconductor industry. What exactly is driving this stock price rise?

The progression of AI chips is reshaping the market rapidly. As technology advances, AI is permeating various sectors, notably in automation, data analytics, and intelligent decision-making. The rapid development of AI demands robust computational power, where TSMC excels. Recent market research shows growing demand for AI GPUs and AI ASICs, especially as global tech giants like Apple, NVIDIA, AMD, and Broadcom expand their AI market presence, underscoring TSMC's significant role. Known as the "King of Chip Foundry," TSMC's advanced 5nm and smaller process chip technology allows it to stand out amid intense market competition.

TSMC's stock rebound is chiefly attributed to substantial orders for A-series chips from Apple's latest iPhone 16 models. These orders not only symbolize substantial market demand but also reflect trust in TSMC’s manufacturing capabilities. Concurrently, financial reports from Broadcom and Marvell reveal a consistent increase in demand for AI ASICs related to AI GPUs, further propelling TSMC's market performance.

TSMC dominates the chip foundry field with unrivaled technical expertise and market share, boasting clients such as Apple, NVIDIA, and AMD. Its multiple advanced technologies, like Chip-on-Wafer-on-Substrate (CoWoS) and 3D chip packaging capabilities, enable TSMC to swiftly address market demands tied to AI projects.

Notably, TSMC plans to adjust its advanced process pricing, particularly focusing on high-performance computing chip foundry orders related to AI, with expected price hikes of 8% to 10%. Meanwhile, prices for advanced packaging services like CoWoS could rise up to 20%. These adjustments will further solidify TSMC's leadership position in the global AI chip market, providing strong support for its rising stock price.

Future market outlooks suggest promising growth momentum for the global data center AI chip market over the next few years. As highlighted by AMD's CEO Lisa Su, the demand for data center AI chips is expected to reach $500 billion by 2028, with a compound annual growth rate possibly exceeding 60%. This figure is astounding and attests to the strong industry expectations for AI chip demand.

Broadcom, a key client of TSMC, has made notable strides in the AI ASIC chip market. Its recent financial statements indicate AI-related revenue soared by 220% year-over-year, reflecting the industry’s fervent demand for AI chips. This undoubtedly provides a more robust foundation for TSMC's continued growth.

In the current technological ecosystem, TSMC not only faces opportunities but also competitive pressure from rivals. Despite yield issues challenging Samsung and Intel in advanced process competition, TSMC maintains a significant lead. Analysts predict TSMC's gross profit margin could climb to 59.3%, indicating sustained profitability driven by favorable market demand and pricing strategies.

Combining analyses from Wall Street's major institutions, bullish reports on TSMC are increasingly prevalent, with Goldman Sachs even raising its U.S. ADR target price to $254. This market confidence will undoubtedly further boost TSMC's stock performance. Concurrently, Morgan Stanley also highlights TSMC's substantial stock price potential, suggesting it could achieve a value of 1,388 New Taiwan dollars in the future.

In conclusion, TSMC's stock achieving new highs is more than mere chance; it profoundly reflects the swift expansion of AI technology worldwide and the urgent market desire for high-tech chips. As the sole entity capable of accommodating such massive foundry demands, TSMC is poised to continue leading the global semiconductor market's evolution in the coming years. Investors observing this phenomenon should not only focus on TSMC's performance but also keep an eye on the entire industry's trends. How will the market evolve in the future? We will watch with anticipation.