TSMC is benefiting from a sharp increase in demand for agentic AI chips, supporting revenue growth, while geopolitical risk in the Taiwan Strait has emerged as an investment consideration. Although the company is expanding its overseas sites, they reportedly still lag behind Taiwan's fabs in advanced process technology.
TSMC, the world's largest contract chipmaker, is reportedly continuing to expand revenue on the back of surging demand for chips used in agentic AI. It is said to supply leading-edge semiconductors to leaders in the AI computing market, including NVIDIA, AMD, Broadcom and Marvell Technology, as key customers.
Investors, however, are weighing the company's strong growth against the geopolitical risk arising from its concentration of manufacturing sites in Taiwan, with tensions over the Taiwan Strait regarded as a source of long-term uncertainty. Production capacity is being expanded in Arizona in the United States, Japan and Germany, but the overseas sites are reportedly still several generations behind the most advanced fabs in Taiwan.
NVIDIA's projected revenue growth for the second quarter of fiscal 2027 is also regarded as an important data point for the market and could affect trends across the AI supply chain. The operational status of the entire AI chip supply chain is seen as affecting both TSMC's growth and geopolitical concerns.