Artificial Intelligence
Major chip manufacturer hits R18 trillion in value
The Taiwanese chipmaker overtook Berkshire Hathaway earlier in June to become the world’s eighth most valuable company.
Taiwan Semiconductor Manufacturing briefly reached a market capitalization of over $1 trillion after Morgan Stanley and other brokers raised price targets on the chipmaker ahead of its earnings announcement.
Shares of TSMC ADRs surged up to 4.8%, hitting the milestone at the start of trading in New York on Monday, pushing its year-to-date share price increase beyond 80%.
In early June, the Taiwanese chipmaker surpassed Berkshire Hathaway to become the world’s eighth most valuable company, based on its ADRs, which trade at a premium compared to its shares traded in Taipei.
Morningstar Inc. analyst Phelix Lee commented, “Seeing TSMC ADRs nearing a $1 trillion valuation is a significant achievement, with technological advancements projected well into the 2040s.”
TSMC’s unique position as the primary supplier of critical chips for companies like Apple Inc. and Nvidia has made it a preferred investment choice among global investors focusing on artificial intelligence.
These trillion-dollar companies have witnessed appreciation in their shares due to the AI boom, positioning the indispensable chipmaker as an attractive investment opportunity in comparison.
Despite escalating tensions in the Taiwan Strait, multiple Wall Street brokerages raised their price targets for TSMC, attributing the surge to increasing demand in AI-related technologies and potential price increases in 2025 that could enhance earnings.
TSMC’s ADRs have outperformed its Taipei-listed shares due to their accessibility to foreign investors and fungibility, unlike the Taiwan shares that require special regulatory approval for conversion into US equivalents.
Analysts Boost Targets
Monday’s market rally followed Morgan Stanley’s upward revision of its target price for TSMC by approximately 9%, anticipating an upward revision of the chipmaker’s full-year sales forecast in the upcoming earnings report.
The brokerage firm also anticipates TSMC to increase wafer prices owing to its strong bargaining position in the market.
Morgan Stanley analysts, including Charlie Chan, stated in a note on Sunday, “TSMC’s effective marketing strategy appears to be yielding results. Our recent supply chain assessments suggest that TSMC is signaling potential tightness in leading-edge foundry supply in 2025, implying customers may face challenges in securing ample capacity without recognizing TSMC’s value.”
