In a defining moment for the global semiconductor industry, Taiwan Semiconductor Manufacturing Company (TSMC) has overtaken American investment conglomerate Berkshire Hathaway in market capitalisation, climbing to the ninth spot globally in terms of market value for its American depositary receipts (ADRs). This reflects the growing investor confidence in AI-led demand for advanced semiconductors, a sector in which TSMC plays a critical role.

How the Market Moved

TSMC’s ADRs gained 0.89% in Monday’s U.S. trading session, closing at USD 207. This pushed the company's ADR market capitalisation to USD 1.07 trillion, just edging past Berkshire Hathaway’s USD 1.06 trillion, which saw a minor 0.04% dip. The rally came amid growing optimism around U.S.-China trade negotiations and a broader bullish tone in tech stocks.

The Nasdaq index, dominated by tech giants, rose 0.31%, while the Philadelphia Semiconductor Index, a key benchmark for chip stocks, jumped 1.96%, highlighting renewed enthusiasm in the chipmaking industry.

Strong Performance in Local Market

Following the U.S. trading session, TSMC shares listed on Taiwan’s main board surged 3.98%, closing at NTD 1,045.00 (USD 34.84) on Tuesday. This was the highest closing level since February 6, and the stock movement added a staggering NTD 1.03 trillion to the company’s market capitalisation in a single day, raising the total to NTD 27.09 trillion.

This rally significantly contributed to the Taiex Index—Taiwan’s benchmark stock index—which gained 322 points or 2.07%, closing at 22,242.14. The index is now safely positioned above its key 120-day moving average of 22,010, signaling a strong bullish trend.

Valuation Gap Presents Growth Potential

Despite its rapid rise in value, TSMC is still trading at a relatively low price-to-earnings (P/E) ratio of 17–18, compared to 31–32 for Nvidia, the U.S. chip giant known for its dominance in AI GPUs. This valuation gap presents further upside potential for TSMC, especially as global demand for AI applications continues to grow at an exponential pace.

According to Tom Tang, analyst at MasterLink Securities, the market may see more price action in TSMC’s favor as investors look for value in the semiconductor sector.

Caution: Currency Headwinds and Forecast Revision

While the recent surge is impressive, there are some clouds on the horizon. MasterLink Securities has revised its 2025 earnings forecast for TSMC, lowering the projection to NTD 59 per share, down from NTD 61–62. The primary reason for this cut is the strengthening of the Taiwan dollar against the U.S. dollar.

TSMC has noted that every 1% appreciation in the Taiwan dollar leads to a 0.4 percentage point reduction in its gross margin. This sensitivity to forex movements is crucial, considering TSMC’s large base of international clients and revenue in foreign currencies.

AI-Fueled Momentum: A Global Story

The climb in TSMC’s valuation isn’t happening in a vacuum. The global semiconductor sector is being lifted by massive investments in artificial intelligence, cloud computing, and next-gen connectivity solutions like 5G and 6G.

TSMC is a key foundry partner to companies like Apple, AMD, and Nvidia, making it central to the global supply chain for high-performance chips. As AI adoption scales, demand for 5nm and 3nm nodes, where TSMC leads, is poised to remain robust for the next several years.

Investors are betting that TSMC will be a critical enabler of the next industrial revolution powered by AI, and this sentiment is clearly being reflected in its stock valuation.

Implications for Global Investors

For investors, TSMC’s new position ahead of Berkshire Hathaway is symbolic of a broader shift—from traditional value investing to technology-centric growth investing. While Berkshire represents legacy strength in insurance, railroads, and consumer staples, TSMC embodies the future of computing and digital transformation.

This shift is being observed across markets where tech and AI stocks are becoming core holdings in institutional and retail portfolios alike.

Market Confidence Despite Challenges

TSMC’s ability to rally despite:

• A strong local currency

• A lowered earnings forecast

• Increased geopolitical scrutiny

... shows the depth of market conviction in its long-term value proposition. The company has consistently delivered strong margins, maintained leadership in advanced nodes, and invested heavily in capacity expansion both in Taiwan and overseas (e.g., Arizona, Japan, and Germany).

Broader Economic and Strategic Impact

TSMC’s rise in market capitalisation not only boosts Taiwan’s economic standing but also reinforces its strategic role in global geopolitics. Semiconductors are now seen as vital national infrastructure, and TSMC’s importance has escalated from an industrial to a geopolitical asset.

Taiwan’s economy benefits significantly from TSMC’s performance, as reflected in the Taiex index’s strong movement, and the island nation’s position as the epicentre of chip manufacturing remains unchallenged for now.

Final Thoughts: What to Watch

Investors and analysts will closely monitor:

• Further developments in U.S.-China trade talks

• TSMC’s Q3 and Q4 earnings updates

• Currency trends and macroeconomic data from Taiwan

• Demand trends in AI, automotive chips, and data centers

While valuation multiples remain modest, the upside potential for TSMC is far from exhausted. With global demand for AI chips heating up, and TSMC standing as the primary enabler for multiple tech giants, its market cap is likely to remain on an upward trajectory—possibly even closing the gap with Nvidia and Apple in the years to come.

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