Taiwan Semiconductor Manufacturing Co.’s (TSMC) shares fell by as much as 6.6% on Monday, the biggest decline in nearly six months, due to concerns over artificial intelligence-linked stocks and tariff threats.
The slump came after news that DeepSeek’s AI model might rival leading US developers, causing a rout in chip stocks while Taiwan was closed for the Lunar New Year holiday. Investors were caught off guard by this development, which put pressure on TSMC shares.
TSMC is the main supplier to Apple and Nvidia Corp., but its decline has raised doubts about the need for significant capital expenditure to develop AI technology. This may impact the company’s business, particularly if investors reassess their overall portfolio exposure to AI.
The Taiwanese dollar also slid 6.1% in morning trading, amid a resurgent greenback and Trump’s tariff threats. This could further accelerate foreign outflows from Taiwan, with overseas investors selling $1.26 billion of local shares in January.
Despite this, some analysts remain optimistic about TSMC due to its cutting-edge technology and reasonable valuation. The stock is currently trading at 18 times forward earnings, compared to Intel Corp.’s 32 times and Nvidia’s 27 times.
Analysts note that while certain products may experience short-term order headwinds after the emergence of DeepSeek, “low-cost models may drive broader adoption, spurring faster demand for AI inference chips largely reliant on TSMC to manufacture.” This could boost long-term growth for the company.
Source: https://finance.yahoo.com/news/tsmc-shares-slump-return-holiday-011642891.html