By Ankur Banerjee
SINGAPORE (Reuters) – Investors are bracing for the results from Taiwan’s TSMC on Thursday to show further evidence of the wide-ranging uncertainty in the chip industry spurred by U.S. President Donald Trump’s trade policies.
Chip stocks across the globe have suffered this year as investor jitters about spending on AI infrastructure, the threat of competition after Chinese startup DeepSeek’s launch, and, in recent weeks, fears around U.S. tariffs have sapped sentiment.
On Wednesday, chip stocks were battered as Nvidia warned of a $5.5 billion hit after Washington restricted exports of its AI processor tailored for China, while Dutch giant ASML raised doubts about its outlook.
The spotlight now shifts to earnings from Taiwan Semiconductor Manufacturing Co, whose customers include Apple and Nvidia. TSMC is the main producer of advanced chips used in artificial intelligence applications and has been boosted by strong demand in recent years.
The focus will be on capital spending plans as well as comments on demand for AI chips and how TSMC, the world’s largest contract chipmaker, is navigating Trump’s back-and-forth tariff challenges, investors say.
“Managements are going to be cautious simply because there’s so much uncertainty, but also it’s a little bit of get-out-of-jail-free card,” said Mark Hackett, chief market strategist at Nationwide in Philadelphia. “If they’re nervous about a lot of other things, they can just blame it on the tariff policies and say that there’s too much uncertainty and we’re not going to give you guidance.”
Thursday’s results are likely to show a 54% jump in profit for TSMC, but for Gary Tan, a portfolio manager at Allspring Global Investments, what matters are the firm’s capital expenditure plans and comments on margins.
Tan, whose fund owns TSMC stocks but is underweight on Taiwan, said TSMC is in the strongest position to pass on price increases.
“That will be a proxy that you can work down the supply chain,” he said.
The threat of tariffs has weighed on TSMC stock. The Taipei-listed shares of TSMC are down more than 20% so far in 2025 in its worst start to the year in at least three decades as foreign investors flee. Its U.S. listed shares are down 23%.
Foreign investors have sold $8.66 billion worth of TSMC shares so far this year after buying $2 billion last year and $10.4 billion in 2023, Goldman Sachs said in a report.
The exodus of foreign investors from TSMC and Taiwan stocks through the year underscores the wavering sentiment as traders grapple with Trump’s fast-evolving trade policies.
Taiwan had been due to be hit with a 32% tariff by U.S. President Donald Trump, until he put all tariffs other than those on Chinese goods on hold for talks to take place. Taiwan and the United States on Friday held their first direct talks about the tariffs.
TSMC, which announced last month an extra $100 billion investment in the United States, is central to the U.S. chip industry, and bringing more of its production to U.S. soil would solve a major supply chain risk for customers that also include Qualcomm and Advanced Micro Devices.
Sam Konrad, investment manager for Asian equities at Jupiter Asset Management, said any geopolitical issues with Taiwan would create an extremely big problem for the U.S. tech companies that rely on the Taiwanese companies.
“So we don’t think the Taiwan risk is priced into U.S. tech valuations, but we think it is priced into Taiwanese tech valuations,” Konrad said.
(Reporting by Ankur Banerjee in Singapore; additional reporting by Purvi Agarwal. Editing by Gerry Doyle)
Comments