To The Moon

$Taiwan Semiconductor Manufacturing(TSM)$ is strategically positioned to navigate and even thrive amid U.S.-China trade talks due to several key factors:

Global Indispensability in Advanced Chips: TSMC is the world's leading contract chipmaker, dominating the production of highly advanced semiconductors (like 3nm and 5nm nodes) that are crucial for cutting-edge technologies such as AI, 5G, and high-performance computing. Major tech giants like Apple and Nvidia rely heavily on TSMC for their most critical chips.

There is currently no viable replacement for Taiwan's manufacturing capacity in the advanced semiconductor market. This "silicon shield" makes TSMC vital to both the U.S. and Chinese economies, as disruptions to its production would have profound global economic consequences.

Diversification and Geographic Flexibility: While TSMC's most advanced manufacturing remains in Taiwan, the company has been expanding its global footprint. It has invested significantly in U.S. manufacturing capacity (e.g., in Arizona) and is reportedly considering other locations. This diversification helps mitigate supply chain risks and aligns with U.S. policies encouraging domestic chip production.

Although building fabs outside Taiwan comes with challenges like higher costs and labor shortages, it allows TSMC to maintain its value proposition to customers who seek geographic manufacturing flexibility.

Continued Strong Demand for AI Chips: Despite trade tensions and export controls, the demand for AI-related chips remains exceptionally strong. TSMC's CEO has reiterated robust business prospects for 2025, anticipating a doubling of AI revenue.

This high demand for advanced chips, which TSMC is uniquely positioned to produce, provides a significant tailwind for the company regardless of the broader trade climate.

$Apple(AAPL)$ $Qualcomm(QCOM)$ $Advanced Micro Devices(AMD)$ $Broadcom(AVGO)$

Strategic Importance in Geopolitical Landscape: Taiwan's dominance in semiconductor manufacturing has made it a central focus of U.S.-China geopolitical competition. Both nations recognize the critical role of semiconductors in their economic and national security interests. This strategic importance means that any trade agreements or de-escalations are likely to consider the stability of the semiconductor supply chain, implicitly benefiting TSMC.

While the U.S. aims to restrict China's access to advanced chip technology, and China seeks self-sufficiency, TSMC's existing market position and technological lead make it a crucial player that both sides, to some extent, need to manage.

Ability to Adapt to Export Controls: TSMC has experience navigating export controls and tariffs. While these measures can pose challenges, the company has shown resilience.

For example, despite U.S. export controls on certain AI chips to China, TSMC continues to expect strong AI revenue, suggesting that demand from other regions or less restricted products can compensate.

Key Reasons Why TSMC Appears Set To Do Well Amidst Trade Talk

Taiwan Semiconductor Manufacturing Company (TSMC) appears set to do well amidst U.S.-China trade talks for several key reasons, based on recent news:

Market Optimism: Positive developments or even just ongoing discussions in U.S.-China trade talks tend to boost the overall technology sector. As a major player in this sector, TSMC often benefits from this increased investor confidence, as seen in the recent surge in Taiwan's stock market where TSMC was a significant driver.

Strong Revenue Growth: TSMC has demonstrated robust financial performance, with a reported revenue increase of nearly 40% year-over-year. This inherent strength makes it an attractive investment during times of potential economic uncertainty related to trade.

Dominant Market Position: TSMC holds a leading position in the global semiconductor foundry market, especially in the production of advanced 3 and 5 nanometer chips. This dominance means many of the world's largest tech firms rely on TSMC for their critical chip needs, regardless of geopolitical tensions.

Crucial Role in the Supply Chain: The semiconductor industry is highly interconnected, and TSMC plays a vital role in the global technology supply chain. While trade tensions might cause disruptions for some, TSMC's essential position as a manufacturer for numerous international clients can make it relatively resilient and even potentially benefit as companies adjust their supply chain strategies.

TSMC Price Return Vs S&P 500

In the most recent 12 months, Taiwan Semiconductor Manufacturing (TSM) has demonstrated a total return of 24.81%, outperforming the S&P 500's 1 year return of 12.02%. Over the past year, TSM has also seen a total return of 23.69%, while the S&P 500's 1-year return is 12.02%.

TSM (Taiwan Semiconductor Manufacturing)

12-Month Total Return: 24.81%.

YTD Return: 5.22%.

5-Year Total Return: 300.32%.

Recent Performance: TSM has shown strong gains in the past month, outperforming both the Computer and Technology sector and the S&P 500. 

S&P 500

1-Year Return: 12.02%. 

1-Month Return: 10.59% (excluding dividends). 

Historical Returns: The S&P 500 has historically had an average return of 7.41%, according to Yahoo Finance. 

Recent Performance: The S&P 500 has generally been in line with, or slightly behind, TSM's performance in recent periods. 

TA - Long Term (Exponential Moving Average) - Monthly Timeframe

The bulls appears to be in control on the monthly timeframe with strong positive momentum and the bulls have defended the key level well, we are seeing TSM clearing the previous high, and we could be seeing more price surge in coming weeks or months.

TSM would benefit from the trade talk with restriction reduced or removed to enable the AI demand to continue to grow.

Summary

TSMC's unparalleled technological leadership, its indispensable role in the global tech supply chain, and its strategic importance in the U.S.-China rivalry position it to not only weather trade talks but potentially emerge stronger as both sides seek to secure their access to critical semiconductor technology.

It is important to note that the situation is complex and constantly evolving, but based on recent market reactions and TSMC's fundamental strengths, the company appears well-positioned in the current landscape of U.S.-China trade discussions.

Appreciate if you could share your thoughts in the comment section whether you think TSM would be benefitting well from the results of the US-China trade discussions.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.