Investors Panic as TSMC Wipes Out $100 Billion: What's Next?

The shares of Taiwan Semiconductor Manufacturing Co. (TSMC), a leading force in the global semiconductor market, have experienced a notable downturn, plummeting over 13% since April 11.

by Faruk Imamovic
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Investors Panic as TSMC Wipes Out $100 Billion: What's Next?
© Getty Images/Annabelle Chih

The shares of Taiwan Semiconductor Manufacturing Co. (TSMC), a leading force in the global semiconductor market, have experienced a notable downturn, plummeting over 13% since April 11. This decline has erased more than $100 billion in market value, raising concerns among investors about the potential for further losses.

During the company's recent first-quarter earnings call, TSMC adjusted its growth forecasts downward for the microchip industry, sparking a significant sell-off. As the company cut its growth expectations to just 10% this year, citing multiple challenges including tightening U.S.

export restrictions and a general slowdown in the semiconductor sector, the market reacted swiftly.

Options Market Signals More Trouble Ahead

In response to these challenges, the activity in the options market has intensified.

According to Bloomberg data, put options—investments that signify a bet on the stock's decline—reached their highest levels in three months. This surge indicates that many investors are bracing for TSMC's stock to fall even further.

The overall speculative activity around TSMC has also increased, with the open interest for both put and call options rising by 20% compared to their 20-day average. This heightened activity suggests a growing unease among traders about the future direction of TSMC's stock, especially as the semiconductor industry faces broader economic pressures.

Broader Tech Sector Under Pressure

TSMC's struggles are part of a larger trend affecting the tech industry. Other prominent chipmakers such as Nvidia and Super Micro Computer have also seen significant declines, dropping 8% and 22% respectively over the past week.

The Nasdaq Composite, which includes many tech giants, has not been immune to these downturns, slipping 3% in the same period. Investors and traders are now on edge as they anticipate upcoming earnings reports and consider the impact of potential economic policies, including fewer Federal Reserve rate cuts than initially expected this year.

The tech sector, once seen as relatively resilient, is now navigating through a maze of financial and political challenges that could shape its trajectory for the foreseeable future.

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