Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) market capitalization swelled to US$2 trillion for the first time following a 4.25 percent rally in its American depositary receipts (ADR) overnight, putting the world’s biggest contract chipmaker sixth on the list of the world’s biggest companies by market capitalization, just behind Amazon.com Inc.
The site CompaniesMarketcap.com ranked TSMC ahead of Saudi Aramco and Meta Platforms Inc.
The Taiwanese company’s ADRs on Tuesday surged to US$385.75 on the New York Stock Exchange, as strong demand for artificial intelligence (AI) applications led to chip supply constraints and boost revenue growth to record-breaking levels. Each TSMC ADR represents 5 common shares.
Photo: Ritchie B. Tongo, EPA
TSMC yesterday climbed 2.54 percent on the Taiwan Stock Exchange to close at a new high of NT$2,015.
Global funds on Tuesday snapped up Taiwanese stocks in their biggest one-day buying spree in two decades, signaling confidence that chipmakers would remain AI-boom beneficiaries, even as broader markets face growing fears of disruption.
Overseas investors bought a net US$2.77 billion of Taiwan equities, the most since December 2005, data compiled by Bloomberg showed.
The investment marked a sixth consecutive day of buying by foreign funds.
The surge comes as global equities wobbled following a report from little-known Citrini Research that warned of a dystopian-like wave of AI-driven disruption. While investors have been steering clear of sectors seen as vulnerable, they are doubling down on chipmakers viewed as the backbone of the AI buildout.
Taiwan’s logic-heavy market dominated by advanced semiconductor producers is seen as a relative safe haven in the AI “scare trade.”
“Taiwan is the home of the global AI supply chain,” Union Bancaire Privee managing director Vey-Sern Ling said. “Its companies and stock market will continue to benefit as long as investors believe that AI is disruptive and hence indispensable to our future.”
At the current pace, Taiwan is on track for about US$7 billion in foreign inflows this month, a contrast to the roughly similar amount that has been pulled from memorychip-focused South Korea over the same period.
The growing dominance of TSMC has underpinned the broader market, with the company accounting for about 45 percent of the TAIEX, about triple its weighting a decade earlier. The stock has surged about 30 percent this year, repeatedly notching fresh record highs.
The surge in equity inflows has also lent support to the New Taiwan dollar, although gains have been tempered by steady US dollar buying from local life insurers. The currency’s relative stability might also reduce the need for foreign investors to hedge their exposure.
Khoon Goh, head of Asia research at Australia & New Zealand Banking Group, said he does not expect a significant pickup in currency hedging alongside the stock inflows.
“Equity investors typically do not hedge, unlike fixed-income investors,” Goh said, adding that limited hedging activity should allow the inflows to continue supporting the NT dollar.
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