What's Going On With Nvidia Supplier Taiwan Semi Stock Monday?

Taiwan Semiconductor Manufacturing Co TSM inaugurated its inaugural chip plant in Japan, marking a significant stride in diversifying supply chains amidst growing U.S.-China trade tensions. 

TSMC, the globe’s premier contract chipmaker serving tech giants like Nvidia Corp NVDA and Apple Inc AAPL, has seen interest from Europe, the U.S., and other nations for establishing local operations due to geopolitical pressures. 

The move comes amid concerns voiced by industry experts, such as Paul You from First Securities Investment Corporation, about the potential dampening effect of the U.S.-China chip war on the global semiconductor industry, CNBC reports.

The new facility, situated in Kumamoto, boasts a 45,000-square-meter cleanroom essential for semiconductor production, with operations slated to begin by the end of 2024. 

Japan Advanced Semiconductor Manufacturing Inc (JASM), a TSMC-majority-owned entity, commenced the plant’s construction in April 2022, supported by the Japanese government, Sony Semiconductor Solutions, and Denso Corporation. 

This collaboration aims to revitalize Japan’s semiconductor sector, which is lagging behind global leaders TSMC and Samsung by a decade.

Additionally, TSMC, along with Sony Semiconductor Solutions, Toyota, and Denso, recently committed to further investments in JASM for a second fabrication plant, set to begin construction by year-end and operational by the end of 2027.

This expansion, expected to generate over 3,400 high-tech jobs and backed by a total investment exceeding $20 billion from the Japanese government, will produce chips for automotive, industrial, consumer, and high-performance computing needs. 

Japan committed up to ¥45 billion ($300 million) to support the Leading-edge Semiconductor Technology Center (LSTC), a collective of Japanese researchers in developing advanced chip technologies. 

TSMC is also advancing its international footprint with a $40 billion investment in Arizona, establishing two manufacturing plants to fulfill U.S. demand.

On a separate note, Cathie Wood’s Ark Autonomous Technology and Robotics ETF sold shares of TSMC for the first time in over two years, marking a strategic reduction in investment within the semiconductor industry, including a decrease in holdings of Nvidia. 

On Friday, the ETF offloaded 8,599 American depositary receipts (ADRs) of TSMC, alongside 2,362 shares of Nvidia, reflecting Wood’s adjustment amidst the booming artificial intelligence (AI) market. Despite recent sales, Ark funds maintain a significant stake in TSMC, Bloomberg reports.

Wood, a vocal advocate for AI’s transformative potential, has reallocated investments toward emerging software companies. Consequently, TSMC and Nvidia have been deprioritized in Ark’s Autonomous ETF’s top holdings.

TSMC stock gained 28% year-to-date versus Nvidia at 64%.

Price Action: TSM shares traded higher by 0.66% at $130.38 premarket on the last check Monday.

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

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