TSMC Reports 30% Sales Growth In May, But Stock Remains Under Pressure Over Potential Taiwan Chip Curbs

Revenue in May increased 30% to NT$416.98 billion ($13.2 billion), with combined April and May sales up around 24% year over year.

• Taiwan is reportedly considering stricter export controls on AI chip sales to China to further align with U.S. measures.
• In April, the Taiwanese giant raised its full-year sales guidance.
• Stocktwits retail sentiment for TSM remained ‘bearish.’

Taiwan Semiconductor Manufacturing Co. shares remained under pressure in overnight trading ahead of Wednesday, as upbeat monthly sales failed to lift sentiment amid concerns over potential new chip export restrictions.

TSM dropped 1.3% after gaining 0.3% in the regular session on Tuesday. Earlier in the day, Bloomberg reported, citing its sources, that Taiwan is considering stricter export controls on AI chip sales to China to further align with U.S. measures.

The proposed rules would strengthen authorities' ability to act against the illegal rerouting of advanced AI hardware, including Nvidia’s servers, to China, where such sales have required the U.S. government approval since 2022.

Later, in the early hours of Wednesday, TSMC issued its monthly update. Revenue in May increased 30% to NT$416.98 billion ($13.2 billion), with combined April and May sales up around 24% from a year ago, according to Bloomberg calculations. 

Analysts expect sales growth of 35% in the second quarter, which ends in June, according to estimates from Koyfin. 

Surging Demand For AI Chips

The latest performance shows steady demand for advanced chips, which power data centers and other systems that power AI applications, smartphones and automobiles. 

TSMC makes cutting-edge semiconductors for the likes of Nvidia and Advanced Micro Devices. The biggest buyers of those chips – including cloud companies Alphabet, Amazon, and Microsoft – have set aside $725 billion for AI-related investments this year.

In April, the Taiwanese giant raised its full-year sales guidance and said its capital spending should trend toward the upper end of an existing forecast range of as much as $56 billion in 2026.

Retail View On TSM

On Stocktwits, the retail sentiment for TSM remained ‘bearish’ for a second day, with some traders arguing that the stock is expensive. TSM stock has gained 41% year-to-date and currently trades near an all-time high.

Last month, Nvidia CEO Jensen Huang announced that the U.S. chip designer would set up a headquarters in Taiwan and invest up to $150 billion annually in the region. 

The plan is expected to bring additional capital and resources into the region, potentially boosting business for TSMC and other contract chipmakers that support the company’s AI supply chain.

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