The entry of chip giant Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) into the elite club of the world’s most valuable companies is further proof that the generative artificial intelligence (AI) revolution is shaking up Wall Street.
TSMC, which is listed in Taipei and New York, on Monday briefly broke the US$1-trillion market capitalization barrier, putting it ahead of Tesla Inc as the seventh-most valuable technology giant on the stock market.
Also on Monday, Alphabet Inc, Apple Inc and Meta Platforms Inc hit all-time highs.
Photo: CNA
The top 10 of the world’s most valuable companies is headed by Microsoft Corp and Apple, closely followed by AI chip designer Nvidia Corp.
Their global stock market valuations exceed US$3 trillion on Wall Street.
Alphabet and Amazon.com Inc, which recently topped the US$2-trillion mark, follow in an ever-changing ranking.
Oil giant Saudi Aramco slipped into sixth place, followed by Meta, TSMC and Tesla.
“The semiconductor industry is now the leading sector in the S&P 500,” CFRA Research analyst Angelo Zino said recently. “It’s taken over the last 15 or 18 months. That shows you how much the world has changed.”
The explosion in worldwide demand for chips, boosted by the rise of computing-intensive generative AI, promises sustained expansion for the industry.
Chipmakers are not only attracting investors, but also a host of government subsidies.
US President Joe Biden’s administration, for example, has granted tens of billions of dollars in financial support over several years to help build chip factories in the US.
Worldwide sales of semiconductors, which include integrated circuits, microprocessors and memory chips, are expected to reach US$611.2 billion this year, a record for the industry, the Semiconductor Industry Association said.
Sales are expected to jump by 16 percent this year and 12.5 percent next year, the association said.
Nvidia, a designer of graphics processing units (GPUs), is the frontrunner of the craze, and has triumphed on Wall Street in recent months.
Nvidia’s GPUs are a crucial component in building generative AI and since the November 2022 launch of ChatGPT, its market capitalization has increased eightfold.
In the middle of last month, the Santa Clara, California-based group even briefly became the world’s most valuable publicly traded company, ahead of Microsoft at US$3.3 trillion.
“Nvidia’s GPU chips are the new gold or oil of the technology sector,” Wedbush Securities Inc analysts said.
For them, Nvidia, Apple and Microsoft are now engaged in “the race for the 4 trillion dollar market valuation.”
TSMC, with most of its factories based in Taiwan, is well-placed to also reap the rewards.
While Nvidia, which only designs chips, but does not manufacture them, remains discreet about its supply chain, it is widely believed that the bulk of its products are manufactured by TSMC.
The Taiwanese giant, which controls more than half of the world’s semiconductor demand, posted first-quarter sales of US$18.87 billion, up 13 percent year-on-year, while net income climbed 9 percent to US$6.97 billion.
As for Nvidia, its quarterly profit reached US$14.9 billion, a sevenfold increase over the previous year, on sales of US$26 billion.
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Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) received about NT$147 billion (US$4.71 billion) in subsidies from the US, Japanese, German and Chinese governments over the past two years for its global expansion. Financial data compiled by the world’s largest contract chipmaker showed the company secured NT$4.77 billion in subsidies from the governments in the third quarter, bringing the total for the first three quarters of the year to about NT$71.9 billion. Along with the NT$75.16 billion in financial aid TSMC received last year, the chipmaker obtained NT$147 billion in subsidies in almost two years, the data showed. The subsidies received by its subsidiaries —
Taiwan Semiconductor Manufacturing Co (TSMC) Chairman C.C. Wei (魏哲家) and the company’s former chairman, Mark Liu (劉德音), both received the Robert N. Noyce Award -- the semiconductor industry’s highest honor -- in San Jose, California, on Thursday (local time). Speaking at the award event, Liu, who retired last year, expressed gratitude to his wife, his dissertation advisor at the University of California, Berkeley, his supervisors at AT&T Bell Laboratories -- where he worked on optical fiber communication systems before joining TSMC, TSMC partners, and industry colleagues. Liu said that working alongside TSMC
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