Taiwan Semiconductor Industry Faces Blockade Risks
Written by Emily J. Thompson, Senior Investment Analyst
Updated: May 17 2026
0mins
Source: seekingalpha
- Escalating Blockade Risks: President Xi's warning to Trump about Taiwan interference highlights the threat to Taiwan's status as a semiconductor production hub, potentially disrupting TSMC and impacting the global chip supply chain significantly.
- Chip Production Dependency: TSMC produces 90% of the world's advanced chips, with Apple relying on 90% of its 3nm capacity; a blockade would severely limit hardware supplies for global AI data centers, risking a major market sell-off.
- Automotive Industry Impact: TSMC accounts for 35% of global automotive microcontroller production, and a blockade could delay or cancel millions of cars' production, affecting manufacturers like Ford and GM, reminiscent of the 2021 global chip shortage.
- Shipping Sector Gains: In a blockade scenario, tanker shipping companies like International Seaways and DHT could benefit from increased transport demand, as longer shipping times would lead to higher freight rates, illustrating the market's complex dynamics.
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Analyst Views on TSM
Wall Street analysts forecast TSM stock price to fall
8 Analyst Rating
7 Buy
1 Hold
0 Sell
Strong Buy
Current: 424.860
Low
63.24
Averages
313.46
High
390.00
Current: 424.860
Low
63.24
Averages
313.46
High
390.00
About TSM
Taiwan Semiconductor Manufacturing Co Ltd is a Taiwan-based integrated circuit foundry service provider. The Company is primarily engaged in integrated circuit manufacturing services. It offers advanced process technologies, specialised process solutions, advanced photomask and silicon stacking, and packaging-related technologies, while supporting a comprehensive design ecosystem. The Company's products serve diverse electronic sectors including artificial intelligence, high-performance computing, wired and wireless communications, automotive and industrial equipment, personal computing, information applications, consumer electronics, smart internet of things, and wearable devices.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Investment Opportunities Amid Market Downturns
- Market Downturn Opportunities: During market downturns, many large tech stocks saw valuations drop to recent lows, with investors buying back in March, leading to a 24.7% rise in the Nasdaq Composite and a 15.9% increase in the S&P 500 since April 1, both hitting new highs.
- Valuation Spike Risks: The Shiller P/E ratio has surged to 42 due to the recent rally, nearing levels last seen before the 1999 market crash, indicating potential risks of another downturn, which investors should monitor closely.
- TSMC Market Dominance: Taiwan Semiconductor Manufacturing Company (TSMC) controls 72% of the global foundry market and over 90% of the advanced chip market, leveraging its scale and technological advantages to maintain a strong competitive edge.
- Strong Return Performance: TSMC has risen 40% year-to-date and 119% over the past 12 months, averaging a 33% annualized return, indicating robust performance in the tech sector, making it a potential buy during market corrections.
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- TSMC's Market Dominance: As the world's largest chip fabricator, TSMC boasts a market cap of $2.2 trillion and a gross margin of 60.72%, positioning itself to benefit from sustained data center spending, making it a crucial component of any AI investment portfolio.
- Amazon's Cloud Growth: Amazon's AWS achieved a 28% year-over-year growth in Q1, with plans to invest $200 billion in capital expenditures by 2026 to significantly enhance computing capacity, showcasing its potential and investment value in the AI sector.
- Strong Performance of Google Cloud: Google Cloud's revenue surged 63% year-over-year in Q1, with its proprietary AI chip sales driving operating margins up from 18% to 33%, indicating rapid growth in competitiveness and profitability in the AI market.
- Strategic Importance of AI Chip Business: Both Amazon and Alphabet are rapidly expanding their custom AI chip businesses, with Amazon's custom chip segment growing at a triple-digit rate in Q1, highlighting their diversified capabilities and future investment potential in the AI landscape.
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- Data Center Expenditure Forecast: Nvidia anticipates that data center capital expenditures will reach $1 trillion by 2027, which will drive the entire industry towards an annual spend of $3 trillion to $4 trillion by 2030, indicating robust market demand and growth potential.
- Taiwan Semiconductor's Significant Gains: Taiwan Semiconductor expects its AI chip business to grow at nearly a 60% compounded annual growth rate from 2024 to 2029, and with rising data center expenditures, the company will benefit from the overall increase in chip demand, solidifying its neutral investment position in the AI sector.
- Micron's Surging Market Demand: Micron forecasts that memory chip demand will exceed production capacity by two to three times in 2026, leading to skyrocketing prices and an expected tripling of revenue, showcasing a strong market outlook driven by AI.
- Investment Opportunities in AI Sector: With the strong performance of companies like Nvidia, Taiwan Semiconductor, and Micron, investors should consider these stocks, especially against the backdrop of significant increases in data center capital expenditures, which could yield substantial investment returns.
See More
Investment Opportunities in the AI Era
- TSMC's Market Dominance: As the world's largest chip fabricator, TSMC holds a dominant market share in advanced computing, particularly in AI, with many companies, including Nvidia, relying on its formidable services, ensuring sustained revenue growth over the next decade.
- Amazon's Strong AWS Growth: Amazon's AWS achieved a 28% year-over-year growth in Q1, demonstrating significant progress amid strong AI demand, while the company plans to invest $200 billion in capital expenditures by 2026 to dramatically increase computing capacity, which is expected to yield substantial returns in the future.
- Alphabet's Cloud and AI Strategy: Alphabet's cloud computing business saw a 63% year-over-year growth in Q1, boosted by custom AI chip sales, with operating margins improving from 18% last year to 33% this year, indicating a significant increase in profitability and highlighting the potential for high returns on AI investments.
- Importance of Long-Term Investment Perspective: As AI technology continues to evolve, investors should adopt a decade-long mindset, focusing on companies like TSMC, Amazon, and Alphabet, which not only perform well currently but also possess strong growth potential in the future AI market.
See More
Taiwan Criticizes China's Expulsion of NYT Reporter
- Threat to Free Speech: Taiwan's Presidential Office spokesperson stated that the island will not be silenced by oppression and will continue to collaborate with international partners to support democracy and press freedom, demonstrating a strong commitment to free speech.
- Damage to International Image: Taiwan highlighted that China's expulsion of the journalist not only affects press freedom but also risks damaging China's international image, reflecting potential threats to regional stability.
- Journalist Safety Concerns: The spokesperson emphasized that this incident involves the safety of journalists, indicating that foreign media operating in China face increasing challenges, particularly in a restricted speech environment.
- Escalating Diplomatic Pressure: Despite mounting diplomatic and political pressure from Beijing, Taiwan remains committed to engaging with international partners, showcasing its resilience and determination in a complex geopolitical landscape.
See More
Nvidia Projects Data Center Spending to Reach $1 Trillion
- Data Center Spending Forecast: Nvidia anticipates that capital expenditures for data centers will reach $1 trillion by 2027, which will drive the entire industry towards an annual spending of $3 trillion to $4 trillion by 2030, indicating strong market demand and growth potential for AI technologies.
- Nvidia's Growth Potential: As the leading provider of AI computing units, Nvidia is expected to achieve a 39% revenue growth rate with the upcoming launch of its Rubin architecture platform, and while market analysts remain cautious, its capital expenditure trajectory could lead to even higher growth.
- Taiwan Semiconductor's Market Position: Taiwan Semiconductor, the primary manufacturer of Nvidia's chips, expects its AI chip business to grow at nearly a 60% compound annual growth rate from 2024 to 2029, and despite a 26 times forward P/E ratio, it remains a solid investment choice amid strong AI market demand.
- Micron's Supply-Demand Dynamics: Micron's memory chip market is nearly sold out due to surging AI demand, with expectations to meet only 50% to 66% of medium-term demand by 2026, leading to skyrocketing memory chip prices and a projected tripling of revenue, positioning Micron as a key player for investors capitalizing on memory chip demand.
See More
Investment Opportunities Amid Market Downturns
- Market Downturn Opportunities: During market downturns, many large tech stocks saw valuations drop to recent lows, with investors buying back in March, leading to a 24.7% rise in the Nasdaq Composite and a 15.9% increase in the S&P 500 since April 1, both hitting new highs.
- Valuation Spike Risks: The Shiller P/E ratio has surged to 42 due to the recent rally, nearing levels last seen before the 1999 market crash, indicating potential risks of another downturn, which investors should monitor closely.
- TSMC Market Dominance: Taiwan Semiconductor Manufacturing Company (TSMC) controls 72% of the global foundry market and over 90% of the advanced chip market, leveraging its scale and technological advantages to maintain a strong competitive edge.
- Strong Return Performance: TSMC has risen 40% year-to-date and 119% over the past 12 months, averaging a 33% annualized return, indicating robust performance in the tech sector, making it a potential buy during market corrections.
See More
Artificial Intelligence Investment Outlook is Promising
- TSMC's Market Dominance: As the world's largest chip fabricator, TSMC boasts a market cap of $2.2 trillion and a gross margin of 60.72%, positioning itself to benefit from sustained data center spending, making it a crucial component of any AI investment portfolio.
- Amazon's Cloud Growth: Amazon's AWS achieved a 28% year-over-year growth in Q1, with plans to invest $200 billion in capital expenditures by 2026 to significantly enhance computing capacity, showcasing its potential and investment value in the AI sector.
- Strong Performance of Google Cloud: Google Cloud's revenue surged 63% year-over-year in Q1, with its proprietary AI chip sales driving operating margins up from 18% to 33%, indicating rapid growth in competitiveness and profitability in the AI market.
- Strategic Importance of AI Chip Business: Both Amazon and Alphabet are rapidly expanding their custom AI chip businesses, with Amazon's custom chip segment growing at a triple-digit rate in Q1, highlighting their diversified capabilities and future investment potential in the AI landscape.
See More
Nvidia's Growth Outlook Remains Strong Through 2027
- Data Center Expenditure Forecast: Nvidia anticipates that data center capital expenditures will reach $1 trillion by 2027, which will drive the entire industry towards an annual spend of $3 trillion to $4 trillion by 2030, indicating robust market demand and growth potential.
- Taiwan Semiconductor's Significant Gains: Taiwan Semiconductor expects its AI chip business to grow at nearly a 60% compounded annual growth rate from 2024 to 2029, and with rising data center expenditures, the company will benefit from the overall increase in chip demand, solidifying its neutral investment position in the AI sector.
- Micron's Surging Market Demand: Micron forecasts that memory chip demand will exceed production capacity by two to three times in 2026, leading to skyrocketing prices and an expected tripling of revenue, showcasing a strong market outlook driven by AI.
- Investment Opportunities in AI Sector: With the strong performance of companies like Nvidia, Taiwan Semiconductor, and Micron, investors should consider these stocks, especially against the backdrop of significant increases in data center capital expenditures, which could yield substantial investment returns.
See More
Investment Opportunities in the AI Era
- TSMC's Market Dominance: As the world's largest chip fabricator, TSMC holds a dominant market share in advanced computing, particularly in AI, with many companies, including Nvidia, relying on its formidable services, ensuring sustained revenue growth over the next decade.
- Amazon's Strong AWS Growth: Amazon's AWS achieved a 28% year-over-year growth in Q1, demonstrating significant progress amid strong AI demand, while the company plans to invest $200 billion in capital expenditures by 2026 to dramatically increase computing capacity, which is expected to yield substantial returns in the future.
- Alphabet's Cloud and AI Strategy: Alphabet's cloud computing business saw a 63% year-over-year growth in Q1, boosted by custom AI chip sales, with operating margins improving from 18% last year to 33% this year, indicating a significant increase in profitability and highlighting the potential for high returns on AI investments.
- Importance of Long-Term Investment Perspective: As AI technology continues to evolve, investors should adopt a decade-long mindset, focusing on companies like TSMC, Amazon, and Alphabet, which not only perform well currently but also possess strong growth potential in the future AI market.
See More
Taiwan Criticizes China's Expulsion of NYT Reporter
- Threat to Free Speech: Taiwan's Presidential Office spokesperson stated that the island will not be silenced by oppression and will continue to collaborate with international partners to support democracy and press freedom, demonstrating a strong commitment to free speech.
- Damage to International Image: Taiwan highlighted that China's expulsion of the journalist not only affects press freedom but also risks damaging China's international image, reflecting potential threats to regional stability.
- Journalist Safety Concerns: The spokesperson emphasized that this incident involves the safety of journalists, indicating that foreign media operating in China face increasing challenges, particularly in a restricted speech environment.
- Escalating Diplomatic Pressure: Despite mounting diplomatic and political pressure from Beijing, Taiwan remains committed to engaging with international partners, showcasing its resilience and determination in a complex geopolitical landscape.
See More
Nvidia Projects Data Center Spending to Reach $1 Trillion
- Data Center Spending Forecast: Nvidia anticipates that capital expenditures for data centers will reach $1 trillion by 2027, which will drive the entire industry towards an annual spending of $3 trillion to $4 trillion by 2030, indicating strong market demand and growth potential for AI technologies.
- Nvidia's Growth Potential: As the leading provider of AI computing units, Nvidia is expected to achieve a 39% revenue growth rate with the upcoming launch of its Rubin architecture platform, and while market analysts remain cautious, its capital expenditure trajectory could lead to even higher growth.
- Taiwan Semiconductor's Market Position: Taiwan Semiconductor, the primary manufacturer of Nvidia's chips, expects its AI chip business to grow at nearly a 60% compound annual growth rate from 2024 to 2029, and despite a 26 times forward P/E ratio, it remains a solid investment choice amid strong AI market demand.
- Micron's Supply-Demand Dynamics: Micron's memory chip market is nearly sold out due to surging AI demand, with expectations to meet only 50% to 66% of medium-term demand by 2026, leading to skyrocketing memory chip prices and a projected tripling of revenue, positioning Micron as a key player for investors capitalizing on memory chip demand.
See More
