Shares of Taiwan Semiconductor Manufacturing Co. rose in Taiwan trading on Wednesday after industry attention centered on a large chip supply arrangement between AMD and Meta Platforms that points to stronger demand for the contract manufacturer.
TSMC (NYSE:TSM) (TW:2330) advanced 2.5% to T$2,015.0, keeping the stock near recent record highs. Market participants are also awaiting quarterly results from Nvidia, a major TSMC customer, which are scheduled after the U.S. market close on Wednesday and are expected to offer additional signals about the health of AI-driven chip demand.
Earlier this week AMD (NASDAQ:AMD) disclosed an agreement with Meta (NASDAQ:META) under which AMD will supply up to $60 billion worth of artificial intelligence chips to Meta over the next five years. The scale of that commitment has positive implications for TSMC given the foundry relationship between the companies.
TSMC manufactures virtually all of AMD's chips across its production footprint in Taiwan, Japan, and the United States. AMD shifted its foundry work to TSMC from its prior partner GlobalFoundries in 2018, a transition that concentrated AMD's output with TSMC's facilities.
As one of the limited number of companies able to produce advanced wafer nodes at scale, alongside Samsung, TSMC operates at process technologies including 5 nanometer and 2 nanometer. That position has made the company a principal beneficiary of an AI-driven jump in chip demand over the past three years, since advanced processors are central to training and operating contemporary generative AI systems.
Nvidia produces what many market participants consider the most advanced AI processors currently available and depends closely on TSMC for manufacturing those chips. With Nvidia's quarterly earnings due after the U.S. close, investors expect the report to provide further insight into demand trends across the AI ecosystem and to influence sentiment toward suppliers such as TSMC.
Both Nvidia and TSMC have seen their valuations expand substantially over the past three years as AI-related demand accelerated. For Nvidia, analysts and investors are focused not only on the current quarter's results, where the company is projected to register strong earnings growth, but also on the guidance it will provide for the year ahead.
What to watch
- How Nvidia's quarterly results and forward guidance affect investor expectations for AI chip demand.
- Whether AMD's long-term commitment to supply Meta translates into sustained production demand for TSMC's advanced nodes across Taiwan, Japan, and the United States.