Insights

Taiwan’s chip manufacturing industry shaken

By Paul Reid

03 April 2024

TSMC

The significant earthquake in Taiwan has sent rumbles through the market about Taiwan Semiconductor Manufacturing Company (TSMC). The flux in news coverage has prompted the question among traders–will TSMC shares tumble as market sentiment reacts to the tragedy?

The consensus circling legacy media channels is that TSMC is business as usual already, suggesting there might not be a market reaction at all. Looking at the chart, the price could easily go either way.

A lack of damage to the infrastructure is good news for the Taiwan company, but it’s still early days yet, and given that the precision machinery and hyper-clean environments are both sensitive to seismic events, there may be some surprises over the coming days.

TSMC operational status

TSMC took swift action by evacuating some of its key plants, a move that, while necessary, temporarily halted the heartbeat of chip production. Despite the facilities standing resilient and the positive news spin on the production status, TSMC’s lost production hours pose a significant hurdle, with recovery and the return to full operational capacity expected to stretch over several days. Early indicators suggest potential damage to valuable wafers, a crucial component in semiconductor manufacturing.

This recent development could send shockwaves through the market, affecting not only TSMC stock but also its high-profile clientele, including Apple (AAPL), Alphabet (GOOGL), Microsoft (MSFT), Amazon.com (AMZN),  Meta Platforms (META),  Tesla (TSLA), and Nvidia (NVDA).

Keep a close eye on the Magnificent Seven this week.

Conclusion

While the immediate aftershocks of the earthquake introduce a phase of market speculation and adjustment, the enduring impact on TSMC's production capabilities and the wider semiconductor landscape is yet to fully unfold.

For now, damage to the manufacturing plant is minor and said to be repairable within days, so the company won’t be seeing massive deficits in its production output, but we also know that sentiment doesn’t always account for long-term solvency or profitability, so there might be some investor caution translating to the markets, regardless of what the media says.

If you are unsure which way TSMC stock might be going, consider testing your instincts risk-free with the Exness demo account. Given that TSMC plays a massive role in global tech, the future remains bright for the Taiwan Semiconductor Manufacturing Company, so any bearish actions will be flexing against overall bullish outlooks.


This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Author:

Paul Reid
Paul Reid

Paul Reid is a financial journalist dedicated to uncovering hidden fundamental connections that can give traders an advantage. Focusing primarily on the stock market, Paul's instincts for identifying major company shifts is well established from following the financial markets for over a decade.