TLDR
- Taiwan Semiconductor shares advanced 1.8% to $355 Monday following news that U.S. officials will exempt Big Tech chips from planned tariffs if tied to TSMC’s American investments.
- NVIDIA’s Jensen Huang said TSMC needs to double production capacity to handle massive AI chip demand, indicating sustained orders but requiring major capital spending.
- The chipmaker raised its quarterly dividend to $0.9678 and posted January 2026 revenue of TWD 401.255 billion, marking a 36.8% year-over-year increase.
- Wall Street maintains bullish outlook with average price target of $381.67 and multiple recent upgrades from firms including Needham and Freedom Capital.
- Taiwanese government officials rejected U.S. pressure to move 40% of chip production stateside, potentially complicating subsidy agreements.
Taiwan Semiconductor stock rose 1.8% during Monday’s session, reaching $355.28 on news that could reshape the company’s competitive position. The stock traded 14.5 million shares, slightly under normal volume.
Taiwan Semiconductor Manufacturing Company Limited, TSM
Washington officials announced exemptions for Big Tech chips from the next wave of tariffs. The carve-outs depend on TSMC meeting its commitments to expand manufacturing operations in the United States.
This development removes uncertainty for TSMC’s major clients like Apple, NVIDIA, and Qualcomm. These companies depend on TSMC’s advanced nodes to manufacture their flagship processors and AI accelerators.
The tariff relief comes at a critical time as global chip supply chains face ongoing scrutiny. TSMC controls roughly 60% of the global foundry market and produces virtually all cutting-edge chips.
Capacity Constraints Meet AI Growth
NVIDIA CEO Jensen Huang highlighted the scale of demand facing Taiwan Semiconductor. Huang stated TSMC would likely need to double its manufacturing capacity to satisfy AI chip orders over the coming years.
The projection underscores robust revenue visibility for TSMC through 2028. But it also means the company must maintain aggressive capital spending to build new fabrication facilities.
TSMC’s financial performance supports this growth trajectory. January 2026 revenue reached TWD 401.255 billion, up 36.8% compared to January 2025.
Month-over-month revenue climbed 19.8%, showing accelerating momentum entering the new year. The company also increased its quarterly dividend payout to $0.9678 per share from the previous $0.83 level.
At current prices, the dividend provides shareholders a 1.1% annual yield. TSMC maintains a payout ratio of 23.57%, leaving room for future increases as earnings grow.
Analysts Boost Price Targets
Wall Street continues raising expectations for Taiwan Semiconductor. Needham boosted its price target to $410 from $360 in mid-January while keeping a buy rating.
Freedom Capital upgraded the stock to strong-buy around the same time. Goldman Sachs reiterated its buy recommendation in early January.
The average analyst price target stands at $381.67, suggesting roughly 7% upside potential. Twelve analysts cover the stock with buy or strong-buy ratings while just one maintains a hold.
TSMC trades at a forward P/E of 33.36, reasonable for a company posting 37% revenue growth. The market cap sits at $1.84 trillion with a conservative debt-to-equity ratio of 0.19.
U.S. Expansion Faces Hurdles
Taiwan Semiconductor continues building out Arizona manufacturing capacity to diversify away from Taiwan-based production. The strategy addresses customer concerns while qualifying TSMC for U.S. CHIPS Act funding.
However, Taiwanese officials recently rebuffed American demands to relocate 40% of chip production to U.S. facilities. Government representatives called the request impossible to fulfill.
The pushback creates tension in what had seemed like smooth cooperation. It raises questions about whether TSMC can meet expectations that may be attached to subsidy disbursements.
Major institutional investors increased their positions despite geopolitical complications. Jennison Associates lifted its stake 26.7% to 12 million shares valued at $2.7 billion.
Brown Advisory expanded holdings 43.2% to 6.65 million shares in the second quarter. Arrowstreet Capital doubled its position to 3.5 million shares during the same period.
Taiwan Semiconductor stock has gained 69% over the past year.
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