TSMC Pares Gains After $72 Billion Surge to Start the Week

(Bloomberg) -- Taiwan Semiconductor Manufacturing Co. kept up its record-breaking streak Tuesday, briefly becoming the world’s 10th most valuable corporation before paring gains.

Taiwan’s biggest stock was up around 1.2% in Taipei, after rising as much as 9.9% and going beyond $410 billion in value, leapfrogging U.S. giants Johnson & Johnson and Visa Inc. in the process. Daily stock moves are capped at 10% in Taiwan’s equity market.

It’s difficult to overstate the influence that TSMC wields on Taiwan’s financial markets. Making up almost a third of the local benchmark, it has single-handedly pushed the Taiex past a record that had stood for three decades. Its rally is attracting foreign flows into Taiwanese equities, increasing demand for the local currency. The Taiwan dollar rose 1% Tuesday to the strongest since April 2018.

The latest boost to TSMC’s shares came after Intel Corp. warned last week that its 7-nanometer chips are behind schedule and it may outsource their production. The U.S. chipmaker is expected to funnel new business to TSMC, given its global lead in silicon fabrication and track record of making semiconductors for the world’s largest tech corporations.

Intel’s struggles are buoying stocks in Asian suppliers of made-to-order chips. Samsung Electronics Co., which is investing heavily in its own foundry business, jumped as much as 5.8% Tuesday, its biggest intraday gain in almost two months. Chinese rival Semiconductor Manufacturing International Corp. climbed 6.6% in Hong Kong.

“Samsung Electronics’ position as a foundry partner is expected to rise. Korean investors anticipate that Samsung could produce Intel’s CPU and discrete GPU,” Hana Financial Investment analysts wrote in a note. But “to narrow the gap with TSMC, it is essential for Samsung to expand its Austin fab.”

A report on Monday suggested that Intel had placed orders with TSMC for 180,000 units of 6nm chips for 2021. Meanwhile, brokerages including Nomura Holdings Inc. and Credit Suisse Group AG upgraded TSMC to the equivalent of buy.

(Updates with share price and analyst comment from first paragraph)

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