TSMC and Intel Stocks Defy Market Trends Amid Semiconductor Industry Challenges

Why TSMC Stock Gained Despite Huge Sell-Offs for Chip Companies Today | The Motley Fool

TSMC's quarterly results were great, but the market also had some huge risk factors to weigh. Semiconductor stocks were hit hard in Thursday's trading, but Taiwan Semiconductor Manufacturing (TSM 0.39%) stock managed to end the day in the green. The chip company's share price closed out the daily session up 0.4%, according to data from S&P Global Market Intelligence. TSMC posted second-quarter results after the market closed yesterday, delivering sales and earnings for the period that beat Wall Street's expectations. The company also issued strong guidance. The quarterly report was impressive enough to propel the stock to a small gain today despite geopolitical concerns spurring big sell-offs for many other semiconductor companies. TSMC's revenue surged 32.8% year over year in the second quarter to hit $20.82 billion and beat the average analyst estimate's sales guidance by $730 million. Earnings per American depositary receipt came in at $1.48, topping Wall Street's forecast for per-share earnings of $1.42. The company's strong sales and earnings performance was aided by rising demand for artificial intelligence (AI) hardware and services, and it looks like the momentum is poised to continue. For the third quarter, TSMC is guiding for sales to come in between $22.4 billion and $23.2 billion. At the midpoint of the guidance range, that would represent a 9.5% sequential quarterly sales increase and a 32% increase from its performance in Q3 last year. Thanks to the strong quarterly results and guidance, TSMC stock climbed as much as 4.4% in Thursday's trading. But geopolitical pressures caused the chip fabrication leader to give up most of its gains. Bloomberg reported yesterday that former president and current presidential candidate Donald Trump recently made comments suggesting that the U.S. could require Taiwan to pay money for defense services if he were to win the upcoming election and re-enter the office. Investors are worried that such a stance could make it more likely that China will invade Taiwan, which is currently the epicenter for advanced chip fabrication thanks to TSMC. Adding another layer of complicating factors, Bloomberg also reported yesterday that President Biden's administration was considering the implementation of new regulations that would make it more difficult for companies to export chips to China.

Why Intel Stock Gained Despite Huge Volatility Today | The Motley Fool

In a trading day that saw most semiconductor stocks get crushed, Intel still posted gains. Intel (INTC 1.19%) stock gained ground in Thursday's trading despite big sell-offs hitting the broader tech sector. The semiconductor company's share price closed out the daily session up 1.2%, according to data from S&P Global Market Intelligence. Earlier in the day's session, it had been up as much as 5.3%. Chip stocks broadly got crushed in today's trading. In fact, the performance marked the worst single-day valuation slide for the industry in more than four years. But despite the big semiconductor sell-off, Intel was able to post gains thanks to the promise of the company's expanding chip fabrication business. Semiconductor investors have gotten hit by a surge of concerning news lately. Bloomberg reported yesterday that former president and current presidential candidate Donald Trump had made comments suggesting that the U.S. could be hesitant to defend Taiwan or require it to pay for services if he were to become Commander-in-Chief again. Taiwan is home to Taiwan Semiconductor Manufacturing, the world's leading contract semiconductor fabrication company and the leading manufacturer of advanced chips used for artificial intelligence (AI), accelerated computing, and other vital national security and economic applications. Along similar lines, Bloomberg also reported yesterday that the Biden administration was weighing the implementation of much stronger export restrictions for chip and semiconductor equipment manufacturing companies dealing with the Chinese market. Measures are already in place to prevent Nvidia, AMD, Intel, and other companies from exporting their most advanced chips and processors to China, but the new measure currently being considered would allow the U.S. to implement much more far-reaching restrictions. If adopted, the foreign direct product rule would allow for restrictions to be put on products manufactured in other countries if they used any U.S.-derived technology. With the tense geopolitical situation between China and Taiwan raising questions about chip availability in the future, the U.S. and other Western allies have been making moves to ramp up domestic fabrication capabilities. These countries have been pouring billions of stimulus dollars into improving their ability to manufacture chips, and Intel has already been a major recipient of funding. There's a good chance that more capital support from the public sector is on the way, and geopolitical risk factors could accelerate the growth of Intel's fab business. Intel currently ranks as the world's third-largest chip fabrication company, trailing behind only TSMC and Samsung. But the company is placing a much bigger emphasis on providing third-party fab services, and it expects that it will become the second-biggest player in the space by 2030.