Nvidia’s profits have led to a sharp increase in the shares of upstream chip companies, ASML and TSMC. On Monday, TSMC’s market capitalization momentarily surpassed $1 trillion. The value of a share of ASML, the third most valuable firm in Europe, surpassed 1,000 euros. One of the most valuable firms in the world, Nvidia is a tech powerhouse that has been riding the wave of artificial intelligence. Currently, the excitement is also being enjoyed by Nvidia’s upstream partners and suppliers.
The New York Stock Exchange’s ADR shares of Taiwan Semiconductor Manufacturing Company, or TSMC, momentarily surpassed the $1 trillion valuation threshold on Monday following a 4.8% increase. So far this year, the stock has increased by almost 80%. At 10:55 a.m. local time on Tuesday, shares of TSMC were trading 0.5% higher on the Taiwan Stock Exchange at 1,040 New Taiwan Dollars, or $32.26, a share.
TSMC’s stock surge on Monday came after Morgan Stanley said it expects the chip giant to hike full-year sales estimates next Thursday when it announces second-quarter earnings. TSMC produces, by some estimates, 90% of the world’s most advanced processor chips and is the sole supplier of key advanced chips to Nvidia and Apple, among others.
“Our latest supply chain checks indicate that TSMC is delivering a message that leading-edge foundry supply could be tight in 2025 and customers may not get sufficient capacity allocation without ‘appreciating TSMC’s value,'” wrote Morgan Stanley analysts led by Charlie Chan on Sunday. The analysts called the strategy “hunger marketing.”
Last month, TSMC CEO C.C. Wei hinted that the company was considering a price hike for its products. Meanwhile, Nvidia CEO Jensen Huang has said there’s so much demand for his company’s chips that he has to allocate them “fairly.”
It’s not just TSMC that’s reaping the benefits of Nvidia’s meteoric rise. Dutch company ASML, TSMC’s equipment supplier, also got a lift with shares briefly crossing 1,000 euros, or $1,082, apiece for the first time on Monday. ASML shares closed 0.5% higher at 997.90 euros apiece on the Amsterdam Stock Exchange on Monday and are 42% higher year to date.
After rising 4.8% on Monday, Taiwan Semiconductor Manufacturing Company’s (TSMC) ADR shares on the New York Stock Exchange briefly crossed the $1 trillion valuation mark. The stock has gained about 80% so far this year. As of 10:55 a.m. local time on Tuesday, TSMC’s shares were trading at 1,040 New Taiwan Dollars, or $32.26, a share, on the Taiwan Stock Exchange, 0.5% higher.
*Nvidia’s Influence on TSMC and ASML
Nvidia’s success in the realm of artificial intelligence has had a significant ripple effect, profoundly influencing its upstream partners, TSMC and ASML. The meteoric rise of Nvidia, driven by its strategic positioning and technological advancements in AI, has not only bolstered its own market value but also catapulted its key suppliers into unprecedented territory.
Taiwan Semiconductor Manufacturing Company (TSMC) stands as a pivotal player in this narrative. TSMC’s shares on the New York Stock Exchange briefly crossed the $1 trillion valuation mark, a testament to the company’s critical role in the tech supply chain. The semiconductor giant has seen its stock soar nearly 80% this year, driven by the increasing demand for advanced processor chips. TSMC produces around 90% of the world’s most advanced chips, making it the backbone of Nvidia’s cutting-edge technology and Apple’s sophisticated devices.
The surge in TSMC’s stock on Monday was sparked by Morgan Stanley’s optimistic projection of a full-year sales estimate hike. This anticipation of increased earnings reflects the burgeoning demand for semiconductors, especially as industries worldwide accelerate their digital transformations. Morgan Stanley’s analysis underscores a crucial point: TSMC’s leading-edge foundry supply could face tight conditions in 2025, potentially limiting capacity allocation for customers who do not sufficiently value TSMC’s contributions. This so-called “hunger marketing” strategy emphasizes the growing scarcity and value of TSMC’s production capabilities.
TSMC’s CEO, C.C. Wei, hinted at the possibility of price hikes for the company’s products, a move that aligns with the heightened demand and constrained supply dynamics. This strategic positioning not only reinforces TSMC’s market dominance but also ensures its ability to capitalize on the surging need for advanced semiconductors.
Nvidia’s CEO, Jensen Huang, has echoed the sentiment of overwhelming demand. Huang’s comments about the need to “fairly” allocate Nvidia’s chips highlight the intensity of the current market landscape. The unprecedented demand for Nvidia’s AI-driven technologies has created a supply crunch, further underscoring the indispensable role of its upstream partners.
Dutch company ASML, a crucial supplier of TSMC, has similarly reaped substantial benefits from Nvidia’s ascendancy. ASML’s shares crossed the 1,000-euro mark, a significant milestone that reflects the company’s integral role in the semiconductor ecosystem. ASML’s advanced lithography machines are essential for the production of the cutting-edge chips that companies like TSMC manufacture. The symbiotic relationship between ASML and TSMC, and by extension Nvidia, illustrates the interconnected nature of the tech supply chain.
ASML’s stock closed at 997.90 euros on the Amsterdam Stock Exchange, marking a 42% increase year to date. This surge in value positions ASML as the third-most valuable company in Europe, trailing only behind Novo Nordisk and LVMH. The company’s market capitalization of 395 billion euros underscores its pivotal role in enabling the technological advancements that drive the digital economy.
The broader implications of Nvidia’s influence extend beyond immediate financial gains for TSMC and ASML. The advancements in AI and semiconductor technology spearheaded by Nvidia have far-reaching impacts on various industries, from consumer electronics to automotive and healthcare. As these technologies become increasingly integrated into everyday life, the demand for the sophisticated chips produced by TSMC and the advanced machinery supplied by ASML will only continue to grow.
On its upstream partners, TSMC and ASML, Nvidia’s ascent in the AI space has had a significant and varied effect. An example of the complex interdependencies in the semiconductor supply chain may be seen in the symbiotic relationship between two tech giants. TSMC and ASML stand to gain significant advantages from Nvidia’s ongoing efforts to push the limits of artificial intelligence, thereby reinforcing their already important roles in the global technology arena.
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