Taiwan Semi Triggers Retail Investor Rally - What's Going On?

Taiwan Semiconductor Manufacturing Co TSM has garnered significant support from retail investors in Taiwan, driven by financial interests and national security concerns.

The chipmaker, also known as the “holy mountain that safeguards the nation,” has seen a surge in retail ownership despite foreign investors’ withdrawal, Bloomberg reports.

This trend reflects a broader belief among Taiwanese citizens that TSMC’s success is integral to the island’s defense against potential Chinese aggression.

Taiwan Semiconductor has become a cornerstone in many Taiwanese investment portfolios. Notably, the number of small shareholders with fewer than 1,000 shares has reached unprecedented levels.

Taiwan Semiconductor holds a near-monopoly on the world’s most advanced semiconductors, which are essential for products from Apple Inc AAPL and Nvidia Corp NVDA.

Beyond its strategic value, Taiwan Semiconductor is vital to Taiwan’s economy, contributing 8% to its GDP in 2022.

Retail investors are increasingly optimistic, even taking out loans and diverting savings to invest in Taiwan Semiconductor shares, according to the Bloomberg report.

U.S. Presidential candidate Donald Trump recently criticized Taiwan Semiconductor, highlighting the absence of a formal defense treaty between the U.S. and Taiwan following a more significant downturn in the semiconductor industry.

Taiwan Semiconductor stock surged 69% in the last 12 months, driven by the artificial intelligence frenzy. Investors can gain exposure to the stock through the iShares Semiconductor ETF SOXX and the First Trust NASDAQ Technology Dividend Index Fund TDIV.

Price Action: TSM shares closed higher by 7.29% at $165.80 on Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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