Rising political risks for the contract chipmaker and other companies operating in Taiwan cannot be ignored
For investors in chipmakers in Asia, earnings are no longer the only thing to watch. Donald Trump’s comments about whether the US has a duty to defend Taiwan, casting doubt on the US stance towards the country in the event of Chinese aggression, sent shares of Taiwan Semiconductor Manufacturing Co down on Thursday despite strong second-quarter profits. The issue that Trump highlighted is not something that investors can easily brush aside.
China, which views Taiwan as its own territory, has been increasing threats and military exercises around the island. About 80-90 per cent of TSMC’s production capacity remains concentrated in Taiwan. Republican presidential candidate Donald Trump’s comments that Taiwan “did take about 100 per cent of our chip business” and that it should pay the US for its defence means added uncertainty for TSMC stock, which hit a record high earlier this month.
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