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TSMC shares plunge 8.3% to a record high, shrinking over $2 trillion in market value over the year

Update time : 2022-10-13 10:17:43

The global semiconductor industry has arguably entered a recession recently. Following the previous 14% plunge in AMD's share price and yesterday's over 5% plunge in the domestic semiconductor industry, Taiwan, China, has not escaped. on October 11, TSMC's share price suffered a big dive, plunging 8.3% in a single day to close at only NT$401 per share (approximately NT$90 per share) and record the largest drop ever.

Since 2019, TSMC's share price has risen all the way up, benefiting from the growth in demand from the global semiconductor industry, especially during the period just after the outbreak of the 2020 epidemic, when TSMC's production capacity has been running at a high level due to tight capacity in the chip industry. Since this year, however, TSMC's share price in the US has also been close to being cut as the semiconductor market has started to recede after its peak. Its current market capitalisation is only US$347.9 billion, a loss of nearly US$300 billion, equivalent to over RMB2 trillion, compared to a market capitalisation of over US$640 billion at the beginning of the year.
In contrast, however, TSMC's revenue has not dropped significantly, but has instead improved because of new chips coming into production from Apple and Nvidia. Some agencies predict that thanks to TSMC's revenue performance, it is expected to overtake Samsung and Intel this year to become the global leader in the semiconductor market. This is mainly due to its 4nm process being favoured by many manufacturers, but also due to the poor performance of other chip makers.
The reason why TSMC shares have reacted so strongly recently may be related to the US government's restrictions on chip exports to China. Phelix Lee, an equity analyst at Morningstar, wrote in a report, "We believe that the new shock could further dampen sentiment in an industry already ravaged by weak demand for consumer electronics as near-term uncertainty over foundry demand will increase in China, the world's second largest cloud computing market." This may also be the main reason for the recent drop in TSMC and Samsung shares.
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