Here Is Why TSMC Is Trading Higher

Taiwan Semiconductor Manufacturing Co. (NYSE:TSM), or TSMC, is a leading semiconductor contract manufacturing and design company. It serves some of the world’s biggest technology and industrial giants such as Apple, Amazon, and Lockheed Martin, among others. The company’s technical expertise is matchless as it specializes in manufacturing the smallest chips in the industry.

TSMC stock has gained significant value over the past year despite intense political tensions between the U.S. and China. The company lost its biggest Chinese customer Huawei in May after U.S. regulators introduced a new policy. The new rules prohibited manufacturers like TSMC from selling to Huawei unless it receives a license from the U.S. regulators.

Nevertheless, TSMC shares rose sharply at the end of July after rival Intel (INTC) disclosed that it may have to postpone the rollout of its next-generation chips. Last week, multiple reports claimed that Intel has decided to outsource the manufacturing of its discrete graphics chip, called DG2, to TSMC.

Meanwhile, the company recently announced strong financial results for the fourth quarter with an upbeat outlook for the current quarter. TSMC reported earnings of $5.10 billion for the quarter, representing a surge of 23 percent on a year-over-year basis. Revenue jumped 14 percent to $12.68 billion. Looking forward, TSMC expects revenue in the range of $12.7 billion to $13.0 billion for the first quarter.

The company last week disclosed its huge capital spending strategy for the current fiscal year. TSMC said it plans to spend up to $28 billion to manufacture advance chips and meet the growing needs of its key customers. Moreover, it is also preparing for bulk production of its 3-nanometer chips.

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TSMC stock is trading near its 52-week high right now. At 10:06 a.m ET, the stock jumped 5.30 percent to $131.87 on a volume of nearly 5.8 million shares. The latest rally is apparently attributed to its strong quarterly performance and solid demand from customers.