TSMC shares fall 3.3% to $421 as semiconductor selloff deepens

Taiwan Semiconductor Manufacturing Co.'s market value fell to $2.18 trillion as a broad tech rout erased gains from a week of AI-driven optimism.

TSMC's 3.3% drop at Thursday's open deepened a four-day selloff in semiconductor stocks, with the Philadelphia Semiconductor Index tracking toward its worst week since March as AI trade enthusiasm cooled.

"The market is repricing semiconductor names after an aggressive run-up, and TSMC, as the bellwether, bears the brunt," said Charles Shi, semiconductor analyst at Needham & Co. "The question is whether this is a rotation or a structural shift in AI demand."

The stock opened at $420.585, down 3.3% from Wednesday's close, bringing its market capitalization to $2.18 trillion. The decline follows three consecutive sessions of losses for the Nasdaq Composite, which shed more than 1,130 points, or 4.3%, this week. Micron Technology Inc. shares initially fell 5% in pre-market trading before reversing to gain 18% after the memory chipmaker reported better-than-expected fiscal third-quarter results.

TSMC's drop matters beyond the stock itself — the company manufactures chips for Apple Inc., Nvidia Corp., and Advanced Micro Devices Inc., making its share price a proxy for the broader semiconductor supply chain. A sustained selloff could signal weakening demand expectations for AI infrastructure spending, which has driven much of the sector's valuation expansion over the past 18 months.

The selloff comes as investors reassess the sustainability of AI-related capital expenditure after a period of aggressive spending by hyperscalers. TSMC, which trades at roughly 22 times forward earnings, had gained more than 40% year-to-date before this week's pullback, outperforming the broader market on surging demand for its advanced packaging technology, including CoWoS (chip-on-wafer-on-substrate), which is essential for Nvidia's H100 and Blackwell-series graphics processors.

Nvidia shares fell more than 3% in Thursday's trading, while AMD dropped 2.5%. The weakness extended to software names, with Palantir Technologies Inc. down 8% and Amazon.com Inc. declining 3%. Apple Inc. and Alphabet Inc. each fell more than 2.5%, reflecting the breadth of the selloff.

The macro backdrop added pressure. US inflation, as measured by the PCE price index, rose to a three-year high of 4.1% in May, data released Thursday showed, reinforcing the Federal Reserve's hawkish stance under Chair Kevin Warsh. Personal spending rose 0.7%, ahead of the 0.6% consensus estimate, suggesting the economy remains hot enough to keep rates elevated.

For TSMC specifically, the decline erased gains from earlier this week when the company announced it had begun mass production of its 2nm process node (which packs more transistors per square millimeter, improving performance per watt by roughly 15% over the 3nm node). The 2nm ramp is expected to drive revenue growth in the second half of 2026, with Apple and Nvidia among the first customers.

TSMC's drop also weighed on Asian semiconductor peers. Japan's Nikkei 225 surged 4.6% on Thursday, driven by a broader tech rebound after Micron's earnings, but South Korea's Samsung Electronics Co. and SK Hynix Inc. both pared earlier gains as the TSMC news filtered through Asian trading desks.

This article is for informational purposes only and does not constitute investment advice.