The TAIEX (Taiwan Stock Exchange Capitalization Weighted Stock Index) is the main benchmark for stocks listed on the Taiwan Stock Exchange. Market-cap weighted and dominated by semiconductor and technology companies, it has been one of the strongest major equity indices over the past twelve months, rising more than 70% at its peak on the back of the global AI boom.
That momentum has now broken. After hitting an all-time high above 48,000 in late June, the index has sold off sharply. On 29 July it closed at 40,039, extending a multi-session decline that echoes the recent collapse in South Korea’s KOSPI.
TSMC stumbles despite record earnings and investments
TSMC, Taiwan’s dominant company, accounts for more than 40% of the TAIEX. Listed on both the Taiwan Stock Exchange and the New York Stock Exchange, it had largely shrugged off earlier turbulence in the wider AI sector.
In July so far TSMC has dropped more than 17 percent since its June high of $477. Nvidia, Broadcom, and others have performed better. This may come as a surprise to some following on from TSMC’s recent results on July 16.
The firm’s second quarter net profit rose 77 percent year-on-year, marking its ninth straight quarter of double-digit growth. TSMC even raised its full-year 2026 revenue growth outlook to above 40 percent from above 30 percent.
Not only that, but the firm has also announced investing another $100 billion to expand its chipmaking in Arizona. This takes combined spending plans in the U.S. to $265 billion.
Despite the strong results and expansion plans, the share price has continued to fall. Several factors have converged.
Why is TSMC stock tumbling?
There are several reasons that have come together to affect the price of TSMC stock. One of those is general valuation fatigue that we have reported about in the last few months. Another reason is rising CapEx costs like the recent investment in Arizona.
A third pressure has come from China-related headlines. The strong IPO debut of Chinese memory maker CXMT and reports that a state-backed firm has begun mass-producing immersion DUV lithography machines have intensified fears that China is closing the technology gap faster than many investors expected.
Because TSMC is the largest and most liquid chip stock in Asia, it gets sold whenever the sector is under pressure, even if the direct competitive overlap is limited.
It seems like the market is treating any Chinese semiconductor progress as a broader threat to the high valuations that the entire AI-chip supply chain has been awarded. It raises the question: “If China can move this fast in memory and equipment, how secure are premium margins further up the value chain?”
Wider Concerns: TAIEX drops another 3.8% as Japan quake adds uncertainty
The TAIEX has now lost more than 7,000 points from its late-June peak, with the latest session alone seeing a 3.8% drop that extends the multi-day sell-off driven by AI-valuation concerns and semiconductor weakness.
A powerful earthquake in Japan’s Kumamoto prefecture on 28 July has added a fresh layer of uncertainty. The magnitude 7.1 quake (6.8 on the USGS scale) killed at least 13 people and forced the temporary evacuation of TSMC’s JASM manufacturing plant in the region. Production has since begun to resume after structural checks, but other chipmakers including Sony and Renesas also suspended operations for inspections. Aftershocks remain possible in the coming days.
Investors will be watching whether any lasting disruption to Japanese capacity emerges and whether the broader Asian semiconductor sell-off finds a floor once the immediate safety assessments are complete.
Author: Andy Samu
The editorial team at #DisruptionBanking has taken all precautions to ensure that no persons or organizations have been adversely affected or offered any sort of financial advice in this article. This article is most definitely not financial advice.
See Also:
Why TSMC Isn’t Allowed in a UK Stocks and Shares ISA | Disruption Banking
America’s AI Bubble Has the Same Cracks That Just Broke South Korea | Disruption Banking
