TLDRs;
- TSMC stock fell 1.3% despite exemption from U.S. equity stake plans under the CHIPS Act.
- The Trump administration may take equity stakes in select chipmakers like Intel but not TSMC or Micron.
- TSMC invests $100B in U.S. operations, securing $6.6B subsidies, highlighting Washington’s reliance on its technology.
- Semiconductor policies mark historic shifts, with U.S. and EU investing over $96B to secure chip supply chains.
Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s leading chipmaker, saw its stock fall 1.30% on Thursday to close at 1,135 TWD, shedding 15 TWD from its previous session.
The dip followed reports that the U.S. government, while moving toward equity stakes in some semiconductor firms, will not require ownership positions in companies such as TSMC and Micron Technology.
The Trump administration’s move marks a shift in industrial policy under the 2022 CHIPS and Science Act, which earmarked $52.7 billion to boost domestic chip production. According to officials, equity stakes are being considered only for firms not committing to significant U.S. expansion. TSMC, with $100 billion in U.S. investments, including three Arizona fabs valued at $65 billion, remains exempt.
U.S. Signals Shift in Industrial Policy
For decades, U.S. industrial policy revolved around grants and subsidies. However, the new selective equity approach mirrors crisis-era bailouts, where Washington took partial ownership of automakers and banks during the 2008–2009 financial meltdown.
Intel appears to be the focus of this strategy, with officials hinting at a potential 10% equity stake. Analysts suggest this demonstrates Washington’s willingness to intervene more directly in struggling firms to safeguard critical supply chains.
By contrast, TSMC’s large-scale U.S. commitments earned it a $6.6 billion subsidy package without equity obligations, showing that Washington views the Taiwanese company as a cornerstone of American semiconductor resilience.
Geopolitical Risks Amplify Importance of TSMC
The stakes are higher than financial markets alone. Semiconductors are at the heart of AI, 5G, and defense technologies. The Taiwan Strait remains a geopolitical flashpoint, with some analysts estimating a potential conflict could cause $10 trillion in global economic losses within a single year due to chip supply disruptions.
Neither the U.S. nor the EU currently possess the ability to mass-produce the most advanced 2nm and 3nm chips. This leaves Western economies heavily reliant on TSMC.
As a result, both Washington and Brussels have launched massive industrial policy initiatives, the U.S. CHIPS Act and the EU Chips Act (worth €43 billion), to diversify supply chains and reduce vulnerabilities.
Market Reaction and Outlook
Despite the exemption from equity stakes, TSMC shares slipped as traders weighed ongoing global semiconductor volatility. With a market capitalization of 29.43 trillion TWD and a P/E ratio of 20.16, TSMC remains one of the most valuable technology firms worldwide.
Still, short-term pressures persist. Investors are cautious amid ongoing trade tensions, high capital expenditure costs, and global chip demand cycles. Yet, TSMC’s strategic positioning, supplying Nvidia, Apple, and other tech giants, continues to underpin long-term optimism.
Market watchers expect that U.S. subsidies, combined with TSMC’s commitment to advanced manufacturing in Arizona, will reinforce its role as the linchpin of the global semiconductor supply chain. For investors, the short-term dip may represent more of a pause than a pivot.
