TSMC’s Activity Considered a “Huge Concern” by a Trump Nominee. Stock Down 4%
In spite of being considered an alternative to the blockbuster Nvidia (NVDA.US) stock, Taiwan Semiconductor Manufacturing Co. (TSM.US) loses nearly 4% today on fading AI optimism and potential bottlenecks in business activity due to Trump’s policy.
TSMC’s stock has failed its attempt to break over the 100-days exponential moving average (EMA100; dark purple). Source: xStation5
TSMC follows the sector-wide downward slide of the semicondutors stock. With Nvidia’s gross margin outlook being lower than the consensus (71%, exp. 72.1%, prev. 73%), the investors put some off the table, causing AI giant’s stock to fall as much as 4% mid-day. The sentiment shift spread out quickly throughout the entire sector, causing peers to mimic losses.
The company and the sector as a whole faces pressures from the enveloping trade war between US and China. Trump’s nominee for overseeing export policy to China, Jeffrey Kessler, has just called reports of TSMC producing chips for Huawei a “huge concern” during his Senate hearing. He emphasized strong enforcement of trade restrictions, as Huawei is banned from receiving US-related technology.
The statement comes after a Canadian firm found a TSMC chip in Huawei’s AI processor, leading to TSMC suspending shipments to a related company. The US Commerce Department later ordered TSMC to stop certain chip shipments to China. TSMC has not yet commented on the matter
Additionally, Taiwan’s Economy Minister, Kuo Jyh-huei, stated that TSMC requires government approval for overseas joint ventures but faces no restrictions on producing advanced chips abroad, except in China. Reports suggest TSMC is in talks for a stake in Intel, though neither company has confirmed. While Trump has criticized Taiwan for taking US semiconductor business, Kuo reaffirmed Taiwan’s strong chip industry.
Worth noting that TSMC’s recent $65 billion investment in US-based chip factories has been approved by the government. This, with the ongoing negotiations with US officials, aims at mitigating potential tariffs risks that could prevent the company to expand on highly absorbent US market.
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