Monday’s trading day was a record day for Taiwan Semiconductor Manufacturing Company NYSE: TSM, TPE: 2330 as the company’s shares rose on Taiwan’s TAIEX on news that Intel NASDAQ: INTC can partially abandon its production efforts and turn to TSMC’s fables.
TSMC blew past the daily limit of 10% within hours of the opening bell in Taipei, pushing the TAIEX – which makes up about 23% by weight – up 2.3% by the end of trading day on Monday. The addition of $ 35 billion to its market capitalization makes TSMC the 12th most valuable inventory worldwide.
TSMC (NYSE: TSM) is helping the Taiwanese market recover from the Covid recession
Overall, the TAIEX has risen about 45% since the March lows, as markets around the world withdrew as a pandemic panic.
With a marked decline in consumer goods demand, markets in Taiwan fell by nearly a quarter in the month, reflecting global trends.
This recent rally brings the TAIEX back above its 1990 peak of 12,000 points. The market closed above 12,000 during the last trading days of 2019 as Taiwan’s pre-Covid economy ended the year a trade war winner. During 2019, it was one of the few countries in the world that constantly upgraded her year-round growth forecast like many of her peer states stared at recessions. While many believed that independence-minded Tsai Ing-wen and the DPP would worsen Taiwan’s economic prospects, as relations with China have weakened since her election, TAIEX has increased by 50% since her inauguration in 2016.
TSMC (NYSE: TSM) does not need Huawei
When TSMC reported double-digit sales growth in early July, many assumed Huawei was the reason for such impressive sales growth to buy up all the capacity it could handle to ensure sufficient supply before the ‘Kill Order’ that the US made in Huawei’s TSMC placed orders.
As Wccftech Reported earlier this month, analyst research by Credit Suisse outlined a number of scenarios in which TSMC increases sales, even with the gap in its order book that Huawei once occupied. At the time, Credit Suisse believed that MediaTek[/stock]TPE: 2454[/stock] and Qualcomm [/stock]NASDAQ: QCOM[/stock] would take the lion’s share of the additional capacity.
However, analysts never have a crystal ball: Credit Suisse’s models don’t contain Intel’s follies and need to find an outside production partner. For those who keep a close eye on the semiconductor foundry space, Intel is looking for an outside foundry partner not exactly a surprise. Something like that has been in the works for a while. But perhaps surprisingly, how positive the market reacted to the news.