Shares of Taiwan Semiconductor Manufacturing Co. (TSM) rallied on Thursday, closing 4.5% higher at $417.72 after touching an intraday high of $421.97. The move came after the world's leading contract chipmaker raised its long-term outlook for the global semiconductor market, now projecting it will surpass $1.5 trillion by 2030—up sharply from its previous estimate of $1 trillion.
The updated forecast, shared ahead of TSMC's technology symposium, underscores the accelerating demand for artificial intelligence hardware and advanced chip packaging. According to TSMC, AI and high-performance computing will together account for 55% of the market by 2030, with smartphones representing 20%. "Over the past decade, smartphones were the key growth driver for semiconductors. In the future, that growth momentum will come from AI," TSMC Deputy Co-COO Kevin Zhang said at the event, as reported by Focus Taiwan.
TSMC also provided a detailed look at its expansion plans, announcing it will open five new fabrication plants in 2026 to meet surging demand for AI accelerators and next-generation 2-nanometer chips. The company expects 2nm capacity to grow at a 70% compound annual rate from 2026 to 2028. The 2nm process represents a significant leap in performance and energy efficiency, positioning TSMC to capture a larger share of the high-end chip market.
April revenue came in at NT$410.73 billion, up 17.5% year-over-year, while revenue for the first four months of the year totaled NT$1.54 trillion, a 29.9% increase. Although April sales dipped 1.1% from March, the overall trend remains robust, reinforcing the narrative of sustained AI-driven demand.
The broader market also provided a tailwind. U.S. stocks finished higher on Thursday, with the S&P 500 and Nasdaq both closing at record levels. Nvidia (NVDA) advanced after the U.S. approved sales of its H200 chips to Chinese companies, boosting sentiment across the semiconductor sector. However, some peers such as Intel (INTC), Micron (MU), and several other AI-related names slipped.
Applied Materials (AMAT) projected quarterly revenue and adjusted profit above Wall Street expectations after the bell, citing strong data center and AI infrastructure demand. Morningstar analyst William Kerwin described it as a "strengthening of the ongoing AI upcycle" in wafer-fab equipment spending.
In Asia, memory-chip giant SK Hynix is approaching a $1 trillion market cap, riding the same AI momentum. TSMC, with a valuation north of $1.83 trillion, remains the region's most valuable semiconductor company. These developments highlight a broader shift: investors now view chip supply chains as central to the AI trade, not just software or cloud services.
Despite the upbeat outlook, risks remain. Any slowdown in AI chip orders, customer capacity pushbacks, or margin pressure from TSMC's global expansion could challenge the stock's elevated valuation. Additionally, elevated U.S. Treasury yields—expected to stay high with persistent inflation—pose a headwind for high-growth tech stocks. Geopolitical tensions also linger: prediction market Polymarket shows a 7% probability of a Chinese invasion of Taiwan before end-2026, and 11% odds of a military conflict by 2027.
For now, investors are betting on continued growth. TSMC's shares rose as the market priced in a larger AI chip market, supported by new production capacity and evidence that demand is rippling through the entire semiconductor supply chain. If any of these pillars weaken, the stock could face a sharp reversal.
