Home Stocks Taiwan Semiconductor Stock Shakes off Trade Tensions After Huge Q4 Profit Growth

Taiwan Semiconductor Stock Shakes off Trade Tensions After Huge Q4 Profit Growth

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The results closely follow proposals for new U.S. restrictions on exports of AI technology


Taiwan Semiconductor (NYSE:TSM) stock leaped 5% higher in early morning trading Thursday following the Taiwanese chipmaker’s Q4 FY2024 earnings report, which indicated rapid growth.

Strong demand for artificial intelligence (AI) semiconductors helped lift Taiwan Semiconductor’s net profit 57% year over year to the equivalent of $11.38 billion, a record for the company. This result is nearly in line with analysts’ consensus estimate.

Furthermore, Taiwan Semiconductor’s fourth-quarter revenue surged 38.8% to the equivalent of $26.4 billion, beating Wall Street’s consensus forecast.

The firm released these encouraging results amid a tense backdrop. On Monday, the Biden administration proposed new U.S. restrictions on exports of AI technology to over 120 countries.

Taiwan wouldn’t be among those 120+ countries, but the proposed chip export curbs could impact Taiwan Semiconductor’s customers. This proposal is among the outgoing Biden administration’s last before President-elect Donald Trump officially takes office on January 20.

Analysis: Don’t fixate on the past

Today’s traders may be tempted to feel a sense of relief and panic-buy Taiwan Semiconductor shares. After all, seeing green on the screen for the day feels good.

However, a single day’s price action doesn’t define a trend. Taiwan Semiconductor’s fourth-quarter results reflect the company’s past performance before the Biden administration proposed the new AI technology export rules.

Sure, the Trump administration may choose to scrap these proposed restrictions. However, some chip industry participants would certainly like to see Trump block the Biden administration’s proposals.

For example, Ned Finkle, vice president of government affairs at NVIDIA (NASDAQ:NVDA), declared in a statement: “The Biden Administration seeks to undermine America’s leadership with a 200+ page regulatory morass, drafted in secret and without proper legislative review.

“We look forward to a return to policies that strengthen American leadership.”

Yet, it’s not guaranteed that Trump will block all of the Biden administration’s proposals. Moreover, Trump could impose tariffs that have implications for the global chip trade and, therefore, for Taiwan Semiconductor.

Melius Research analysts led by Ben Reitzes noted the uncertainties and potential challenges to Taiwan Semiconductor but remained optimistic.

“While the uncertainty of Trump tariffs plays a role, incremental AI chip restrictions from the Biden Administration don’t help,” they said in a note.

“Once there is more visibility on these two issues, we see performance improving.”

That’s the problem for now, though: a lack of visibility into the near-term path of U.S. technology trade policy. Until this is clarified, any celebration of Taiwan Semiconductor’s past performance may be short-lived.

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David Moadel
Financial Writer

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