Taipei, April 25, 2026 – Taiwan Semiconductor Manufacturing Company Limited (TSMC) surged to an all-time closing high of NT$2,185 in Taipei on Friday, climbing 5.05%, after the island's financial regulator relaxed restrictions on how much local funds can allocate to a single stock. The rule change, which primarily benefits the world's largest contract chipmaker, allows local equity funds and active ETFs to invest up to 25% of their assets in any company that makes up more than 10% of the Taiwan Stock Exchange, up from a previous 10% ceiling. Currently, only TSMC meets that threshold, given its market weight of over 40%.
Regulatory Shift Opens Door for Domestic Funds
The adjustment addresses a long-standing issue: TSMC's market dominance had forced local fund managers to underweight the stock, even as it soared amid the AI chip boom. The new rules are expected to close the gap between TSMC's Taiwan-listed shares and its U.S.-traded American Depositary Receipts (ADRs), which often trade at a premium due to limited international access in Taipei. On Friday, TSMC's ADRs rose $22.85 to $405.51 in New York, with volume exceeding 15.7 million shares.
Broader Market Rally Led by Chip Stocks
The Taiex index advanced 2.7% on the day, fueled by a broad rally in chip stocks. MediaTek jumped 8.1%, and UniMicron Technology added 7.7%. However, the surge was centered on TSMC, as the regulation specifically targets outsized index weights. No other Taiwan-listed company holds a comparable market share.
Strong Earnings and Upbeat Outlook
The buying wave comes on the heels of TSMC's upgraded full-year revenue forecast last week. The company now expects capital spending to reach the upper end of its $52 billion to $56 billion range. First-quarter profit hit T$572.5 billion, a 58% year-over-year increase, driven by what CEO C.C. Wei described as "extremely robust" AI-related demand.
Technology Roadmap and Packaging Expansion
TSMC also unveiled its A13 process technology this week, targeting production in 2029. The new node offers a 6% area reduction over A14 while maintaining design compatibility. The company has decided to skip ASML's high-NA extreme ultraviolet (EUV) lithography systems for the remainder of the decade, citing cost concerns—each high-NA machine costs approximately $400 million, double the price of previous EUV tools. Kevin Zhang, TSMC's deputy co-chief operations officer, said the firm is leveraging existing EUV technology while adhering to an aggressive scaling roadmap.
In advanced packaging, TSMC is moving forward with plans for a new facility in Arizona, aiming for a 2029 opening. Zhang stated the company is "aggressively expanding" capacity there, a critical step for processors used by Nvidia and other AI leaders.
Risks and Market Implications
While the rule change is expected to attract fresh fund flows, analysts caution that it does not guarantee stronger chip demand, better yields, or fatter margins. The move also concentrates more market weight on a single stock in Taiwan. Technically, the industry is shifting toward multi-die packages, which presents challenges such as heat dissipation and structural integrity. Despite these risks, investors are focusing on the immediate catalyst: easier access to TSMC for domestic funds, which alone pushed the chip giant to new highs.
