Key Apple, Nvidia Chip Supplier's Stock Woes Not Yet Over? Here's What Options Data Shows

Investors anticipate a potential further drop in Taiwan Semiconductor Manufacturing Co. TSM stock, which has plummeted over 13% in the past six days.

What Happened: The chipmaker’s stock has been on a downward spiral since its April 11 earnings call, where it revised its growth forecasts for the semiconductor industry due to industry challenges. These revisions led to a market value loss exceeding $100 billion, as reported by Bloomberg on Monday.

The surge in put options, bets on the stock’s decline, reflects increased bearish sentiment. Open interest for both put and call options on Friday was 20% higher than their 20-day averages, according to Bloomberg.

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Other tech giants like NVIDIA Corp NVDA and Super Micro Computer Inc SMCI have also seen significant stock price drops, contributing to broader tech sector unease.

Why It Matters: TSMC’s challenges reflect a broader chip industry trend. The company, a key supplier to both Nvidia and Apple Inc, recently revised its growth forecast for non-memory chip markets to 10%, down from “more than 10%,” due to potential decreased demand for consumer electronics.

Earlier this month, concerns arose regarding the impact of production challenges at TSMC on AI development following a 7.2-magnitude earthquake that temporarily halted chip production.

Despite these challenges, Taiwan is bolstering its “chip diplomacy,” efforts to secure its leading chip producer position through international partnerships. Recent tech deals with the U.S., Canada, France, and Germany aim to support chip design engineer development and nurture tech talent.

Price Action: Taiwan Semiconductor closed Monday up 1.6% at $129.75, with a slight after-hours decline. However, the stock remains up 27.79% year-to-date. Nvidia is trading at $795 (65.08% YTD increase), while Super Micro Computer is at $717 (151.19% YTD increase)from Benzinga Pro

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