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TSMC shares hit record highs two days running after Taiwan relaxed single-stock investment caps for funds, per CNBC
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The chipmaker reported 58% profit growth last week, driven by surging demand for AI processors from Nvidia, Apple, and other tech giants
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Regulatory shift signals Taiwan’s recognition of TSMC’s outsized importance to both its economy and global semiconductor supply chains
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Move could trigger billions in new institutional capital flowing into the stock as fund managers rebalance portfolios
Taiwan Semiconductor Manufacturing Company shares rocketed to an all-time high Friday as regulators eased restrictions that had limited how much institutional investors could pour into the world’s most crucial chipmaker. The move comes just days after TSMC reported a stunning 58% surge in first-quarter profit, underscoring the company’s dominance in the AI chip manufacturing race that’s reshaping global tech.
Taiwan Semiconductor Manufacturing Company is having a moment. The world’s largest contract chipmaker saw its stock surge to yet another record high Friday, extending Thursday’s rally as Taiwan’s financial regulators made a critical shift that could flood billions of dollars into the company.
Taiwan’s Financial Supervisory Commission quietly eased single-stock investment concentration limits for mutual funds and institutional investors, a move that industry watchers say was practically tailor-made for TSMC. The regulatory change allows fund managers to increase their exposure to individual stocks beyond previous caps, which had forced some funds to trim TSMC holdings even as the company’s fundamentals strengthened.
The timing couldn’t be better for TSMC. Just last week, the Hsinchu-based manufacturer reported first-quarter profit jumped 58% year-over-year, blowing past analyst expectations. The surge was fueled by relentless demand for advanced chips that power everything from Nvidia’s AI accelerators to Apple’s latest iPhones and Mac processors.
“TSMC has become too big to ignore, and frankly, too systemically important to artificially constrain,” one Taipei-based fund manager told local media. The company now represents roughly 30% of Taiwan’s benchmark stock index, an unprecedented concentration that had created headaches for portfolio managers trying to track the market while staying within regulatory guardrails.
The regulatory shift reflects a delicate balancing act for Taiwan authorities. On one hand, concentration risk is a legitimate concern when a single company dominates market capitalization. But on the other, TSMC’s technological leadership in manufacturing cutting-edge semiconductors at 3-nanometer and below has made it indispensable to the global tech ecosystem. Restricting investment flows seemed increasingly out of step with economic reality.
TSMC’s first-quarter performance underscored why investors are clamoring for more exposure. The company is currently the exclusive manufacturer of Nvidia’s H100 and H200 AI chips, which remain sold out months in advance as cloud providers and enterprises race to build out AI infrastructure. It’s also ramping production of Apple’s M-series chips and A-series smartphone processors, while juggling orders from AMD, Qualcomm, and dozens of other fabless chip designers.
The AI boom has created a perfect storm for TSMC’s business model. As companies like OpenAI, Microsoft, and Google pour resources into large language models and AI services, demand for high-performance computing chips has gone parabolic. TSMC’s advanced packaging technologies and leading-edge process nodes give it a structural advantage that competitors like Samsung and Intel have struggled to match.
Analysts estimate the regulatory change could unlock $3 to $5 billion in new institutional buying as fund managers who were previously capped rush to increase allocations. That’s meaningful even for a company with TSMC’s $800 billion-plus market capitalization. The stock trades at a premium to historical valuations, but investors seem willing to pay up for exposure to what’s increasingly viewed as critical infrastructure for the AI age.
The move also carries geopolitical undertones. As tensions simmer between the U.S. and China over semiconductor technology and Taiwan’s status, TSMC’s importance as a strategic asset has never been clearer. The company is simultaneously building new fabs in Arizona, Japan, and Germany to diversify its manufacturing footprint, while maintaining its most advanced production in Taiwan.
For now, investors are betting that TSMC’s combination of technological leadership, pricing power, and structural demand will sustain its growth trajectory. The regulatory tailwind from Taiwan authorities just adds fuel to a rally that shows no signs of slowing, even as the stock pushes into uncharted territory.
Taiwan’s decision to ease investment caps on TSMC reflects a pragmatic acknowledgment of the company’s outsized role in both the local economy and global tech supply chains. With AI demand showing no signs of cooling and TSMC’s technological moat widening, institutional investors finally have regulatory clearance to match their portfolio weightings to market reality. The question now isn’t whether more capital will flow into TSMC, but whether the company can sustain the expectations baked into a stock that’s already trading at all-time highs. For chipmaker watchers, the next earnings report will be telling.
