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. The chip manufacturer is expected to raise full-year sales projections when it reports second-quarter profits on Thursday, according to Morgan Stanley, which prompted TSMC’s stock to soar on Monday.
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. ASML’s stock is now worth 395 billion euros — making it the third-most valuable company in Europe after Danish pharma giant Novo Nordisk and French luxury behemoth LVMH.
*Nvidia
The semiconductor industry has been greatly impacted by Nvidia’s incredible rise, with its upstream suppliers, TSMC and ASML, being the main beneficiaries. With a market valuation of more than $1 trillion, Nvidia is among the most valuable firms in the world thanks to its rise, which has been primarily fueled by its leadership in artificial intelligence (AI) technology. Not only does Nvidia have a successful tale to tell, but it also includes its important partners, who are currently seeing unheard-of growth and market valuation.
Nvidia’s strategic focus on AI has transformed it into a powerhouse within the tech industry. The company’s advanced graphics processing units (GPUs) are central to the burgeoning AI revolution, providing the necessary computational power for a wide array of applications, from machine learning to autonomous driving. This dominance in AI technology has created a substantial demand for Nvidia’s products, leading to impressive financial performance and stock market gains. As Nvidia’s stock continues to soar, reaching new heights, its impact on the broader semiconductor supply chain becomes increasingly evident.
TSMC, the Taiwan Semiconductor Manufacturing Company, is a critical supplier for Nvidia, producing the advanced processor chips that power Nvidia’s cutting-edge GPUs. TSMC’s ability to manufacture these high-performance chips has positioned it as an indispensable partner to Nvidia and other tech giants like Apple. The mutual dependence between Nvidia and TSMC underscores the importance of advanced chip manufacturing in the tech ecosystem. As Nvidia’s demand for sophisticated chips grows, TSMC’s production capabilities and market valuation have similarly expanded.
The recent surge in TSMC’s stock price and market cap crossing the $1 trillion mark can be directly linked to Nvidia’s successes. On the New York Stock Exchange, TSMC’s ADR shares witnessed a significant uptick, briefly hitting this milestone after gaining nearly 4.8%. This surge is part of a broader trend, with TSMC’s stock appreciating by almost 80% year-to-date. The market’s response to TSMC’s performance highlights the critical role that Nvidia’s demand for advanced chips plays in driving the growth of its suppliers.
Analysts projected that after the company’s next second-quarter earnings report, Morgan Stanley will probably raise its full-year sales estimates, which further boosted TSMC’s stock climb. According to supply chain checks, there may be a shortage of cutting-edge foundries by 2025, which would force consumers to reserve their chip allocations in advance. This is the basis for this optimistic forecast. The mutually beneficial partnership between TSMC and Nvidia is highlighted by the latter’s strong demand and TSMC’s strategic focus.
Nvidia’s CEO, Jensen Huang, has highlighted the overwhelming demand for the company’s AI chips, emphasizing the need for equitable allocation. This high demand not only cements Nvidia’s market position but also ensures a steady flow of business for TSMC. As Nvidia continues to innovate and push the boundaries of AI technology, its reliance on TSMC’s manufacturing prowess becomes even more pronounced.
ASML, another key player in Nvidia’s supply chain, has also reaped the benefits of Nvidia’s rise. ASML supplies the advanced lithography machines essential for producing the cutting-edge chips that Nvidia designs and TSMC manufactures. The surge in demand for Nvidia’s AI chips has consequently driven up the demand for ASML’s equipment. This interdependency highlights the integrated nature of the semiconductor supply chain, where the success of one company can significantly impact its partners.
ASML’s stock price recently crossed the 1,000-euro mark for the first time, reflecting its strong market performance and the growing importance of its technology. As a key supplier to TSMC, ASML’s fortunes are closely tied to the success of companies like Nvidia. The 42% increase in ASML’s stock price year-to-date further underscores the positive impact of Nvidia’s growth on its upstream suppliers.
The broader context of Nvidia’s impact on the semiconductor industry is framed by the ongoing AI revolution. Nvidia’s advanced GPUs are crucial for powering AI applications, driving demand across various sectors, from healthcare to automotive. This demand, in turn, fuels the growth of its suppliers, creating a positive feedback loop that benefits the entire semiconductor supply chain.
The rapid rise of Nvidia, which is mostly due to its leadership in AI technology, has had a significant impact on downstream suppliers, particularly TSMC and ASML. The win-win arrangement that Nvidia has with its suppliers is another illustration of how the semiconductor industry is united. Cooperation and innovation are critical in the IT industry, as demonstrated by the fact that Nvidia’s main partners stand to benefit greatly from its continued advances in AI and the need for state-of-the-art chips.
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