Taiwan Shares Surge as TSMC Hits Record High Amid AI Enthusiasm

Taiwan’s stock market achieved new heights yesterday, primarily driven by the remarkable performance of Taiwan Semiconductor Manufacturing Co (TSMC). The TAIEX index closed up by 382.67 points, or 1.45 percent, reaching a peak of 26,761.06. TSMC shares rose by 2.56 percent to close at NT$1,400, contributing significantly to the overall market gain.

Investors displayed robust enthusiasm as the market reacted to developments in artificial intelligence (AI). The surge in TSMC’s stock price, along with strong performances from other semiconductor firms, has been attributed to heightened expectations surrounding AI applications. According to Kevin Su, an analyst at Hua Nan Securities Co, “The local main board has repeatedly hit new closing highs in the past few sessions as investors continued to embrace high hopes about AI applications, taking cues from a strong showing in shares of US-based AI chip designer Nvidia Corp.”

TSMC’s closing price, which is perceived as more reasonably valued compared to Nvidia’s, has played a crucial role in its upward momentum. TSMC’s price-to-earnings ratio stands below 25, while Nvidia exceeds 30. This valuation difference has encouraged investors to consider TSMC a more attractive option, leading to its significant contribution of about 280 points to the TAIEX’s rise.

Broad Impact on Semiconductor Sector

The positive momentum from TSMC extended to other major semiconductor companies. MediaTek Inc, a designer of smartphone integrated circuits, saw its shares increase by 3.12 percent, closing at NT$1,320. Meanwhile, memory chip suppliers benefited from rising product prices, with Winbond Electronics Corp climbing 7.78 percent to NT$38.80 and Nanya Technology Corp gaining 4.14 percent to end at NT$83.

The excitement surrounding AI also positively impacted hardware suppliers. Quanta Computer Inc, known for its AI servers, rose 2.04 percent to close at NT$300, while Wistron Corp saw a 2.68 percent increase, ending at NT$153.50. In contrast, Hon Hai Precision Industry Co, an iPhone assembler and AI server supplier, lagged behind with a modest gain of 0.44 percent, closing at NT$226.50.

Despite the substantial gains in the tech sector, non-tech stocks experienced a downturn. Su noted that recent furlough reports indicated challenges for traditional industries, particularly in light of US tariffs. Companies such as Formosa Plastics Corp and Formosa Chemicals & Fibre Corp faced declines of 2.27 percent and 3 percent, respectively. China Steel Corp, Taiwan’s largest steel manufacturer, also dropped by 1.04 percent to close at NT$19.

Market Outlook and Economic Indicators

Profit-taking from earlier gains affected some stocks, with Teco Electric & Machinery Co losing 0.87 percent to close at NT$113.50. In the financial sector, which decreased by 0.63 percent, Fubon Financial Holding Co declined by 1.03 percent to end at NT$86.50, while Cathay Financial Holding Co remained unchanged at NT$65.

Looking ahead, market participants are focused on upcoming economic data. The US will release its September nonfarm payroll figures today, which analysts anticipate will provide insights into the Federal Reserve’s approach to interest rate adjustments.

As Taiwan’s market continues to respond to technological advancements and shifting economic conditions, the performance of TSMC and related companies will likely remain a focal point for investors in the coming weeks.