Taiwan Semiconductor Manufacturing Co. (TSMC) has faced a difficult year, with its stock declining 15% amid growing concerns over potential US tariffs on semiconductor imports and its substantial investment in the United States.
The chipmaker, a key supplier for companies such as Apple and Nvidia, has committed $165 billion to US expansion, but it remains uncertain whether it would receive an exemption from any potential tariffs imposed by a future Trump administration.
Investor sentiment has also been affected by a broader market shift away from stocks tied to artificial intelligence (AI), which had driven semiconductor shares to record highs in 2023.
This combination of political uncertainty and sector rotation has weighed on TSMC’s performance.
However, analysts at JPMorgan remain optimistic about the company’s resilience and market position.
Despite ongoing uncertainties, Hariharan reaffirmed an Overweight rating on TSMC stock, maintaining a price target of 1,500 New Taiwan dollars (NT$).
Tariffs to have limited impact on TSMC’s earnings: JPMorgan
J.P. Morgan analyst Gokul Hariharan downplayed the risk of tariffs significantly affecting TSMC’s earnings, stating that the majority of the company’s exports are directed to regions outside the United States.
“We believe that a reciprocal tariff on direct Taiwan exports into the US is unlikely to have much effect on TSMC, given most of the exports are to other regions. The key impact would be if the US were to impose [an] indirect tariff on semiconductors coming from Taiwan as a part of goods imported into the US,” Hariharan said in a research note.
Even in a worst-case scenario, Hariharan believes TSMC has enough pricing power to adjust its costs accordingly, mitigating any negative impact on earnings.
Additionally, he suggested that the company’s commitment to expanding US manufacturing could make it less vulnerable to sector-specific tariffs.
No role in Intel rescue plan, says JPMorgan
Another major question surrounding TSMC in recent weeks has been whether it might play a role in rescuing Intel’s struggling foundry business.
Reports suggested that TSMC had explored the possibility of a joint venture with Nvidia and Broadcom to take over some of Intel’s chip-making operations.
However, JPMorgan believes this scenario is unlikely.
Hariharan stated that TSMC would only enter into such an arrangement under “very extenuating circumstances” or if there were “very lucrative financial rewards.”
This presents a double-edged scenario for Intel—while it dampens hopes for an immediate cash injection, investors optimistic about the stock may welcome the company’s continued control over its foundry operations.
Intel has been working to regain its position as a leading semiconductor manufacturer, touting its 18A process as a major breakthrough.
However, JPMorgan sees Intel continuing to rely on TSMC for chip production due to delays in mass manufacturing of the 18A process.
The stock closed 0.6% lower at NT$952 in Taiwan on Friday, while its ADRs edged up 0.1% in premarket trading.
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