TSMC Shares Soar Amid AI Demand Surge and U.S. Investigation

TSMC's shares reached an all-time high following impressive third-quarter earnings driven by AI demand. Despite political uncertainties from a U.S. investigation into chip production for Huawei, TSMC forecasts continued growth. The company's strong performance reflects its key role in the AI industry, with potential for further stock increases.

TSMC's Taipei-listed shares achieved a record high on Friday, propelled by stronger-than-expected third-quarter earnings and an optimistic forecast due to robust demand for artificial intelligence (AI).

The stock surged 6% soon after the market opened, reaching T$1,100 ($34.25), exceeding the previous record of T$1,080 set in July. This valuation granted TSMC a market capitalisation of approximately $884 billion, the highest among Asian companies. However, political challenges arose as a U.S. media report claimed an investigation by the U.S. Department of Commerce into TSMC's alleged production of AI or smartphone chips for Huawei.

The world's largest contract chipmaker, TSMC services major clients like Apple and Nvidia, has benefited significantly from the widespread growth of AI. The company reported a 54% increase in quarterly profits, raised its year-end revenue forecast, and predicted a healthy five-year outlook. Analyst Venson Tsai predicted the company's share price could climb even higher, indicating the potential long-term impact of the AI trend has yet to be fully realized in TSMC's stock value.

In light of the U.S. investigation, TSMC reiterated its commitment to international laws and regulations, including export controls, and expressed readiness to conduct thorough investigations if needed. Both the U.S. Commerce Department and Taiwan's Economy Ministry, responsible for export control compliance, declined to comment. In July 2020, TSMC announced it ceased taking new orders from Huawei and stopped shipping wafers after September that year.

(With inputs from agencies.)