- Multi-billion dollar subsidised investment agreed in Arizona
- New plant will make world’s most advanced AI chips
- Nvidia believed to be TSMC’s biggest customer
Shares of Taiwan Semiconductor Manufacturing Company (2330:TPE) surged to a record high on 9 April 2024 after the world’s largest contract chipmaker unveiled plans for a new chip fabrication plant in the US state of Arizona as part of the Biden administration’s efforts to bring AI (artificial intelligence) development closer to the US.
The agreement with the US Commerce Department will see TSMC awarded a $6.6 billion subsidy to build the advanced semiconductor plant in Phoenix, Arizona, plus make the chipmaker eligible for up to $5 billion in low-cost loans.
SHARP TURNAROUND FOR TSMC
The Taiwan-listed stock rallied nearly 5% in response to set a new all-time high of TWD $819 (Taiwan New Dollar). TSMC’s New York-listed American Depository Receipts (TSM:NYSE) rose 1% in overnight trade to $142.79, just 4% shy of their $149.20 record set in early March.
This represents a stark change in fortune for TSMC’s share price after a slump in chip demand triggered by the Covid pandemic. In less than 18-months TSMC’s stock has soared from TWD $379.50, jumping more than 38% iso far in 2024.
AI GIVES TSMC HUGE LIFT
This is a major move for TSMC and forms part of a wider agreement to increase its planned investment for its Arizona facilities by $25 billion to $65 billion, where it plans to produce the world’s most advanced two nanometre chips. Production is set to begin in 2028.
TSMC is a key supplier to some of the world’s largest technology companies, including Apple (AAPL:NASDAQ), Broadcom (AVGO:NASDAQ) and Advanced Micro Devices (AMD:NASDAQ), with an estimated two-thirds market share of the contract chip manufacturing industry.
The firm’s most advanced chips play a key role in powering the processors used to run generative AI programs and AI chips champion Nvidia (NVDA:NASDAQ) is believed to be its biggest single customer.
