How Taiwan Semiconductor’s U.S. Move Could Shift Chipmaking

Key Points

• Taiwan Semiconductor has proposed a joint venture deal with some of the largest players in the semiconductor industry, pushing its upside potential higher.
• Wall Street analysts agree that there is a double-digit upside from here.
• The fundamental reasoning behind this proposal is what drives the story to see a bullish turnout in the industry.

The semiconductor industry has been the center of attention for investors looking to get into the United States technology sector. However, after a couple of years of nothing but upside, it seems that all of the good news had been priced into the stratospheric rallies seen in names like NVIDIA Co. NASDAQ: NVDA, but that volatility might be about to reverse on a new announcement.

Global semiconductor production and capacity leader Taiwan Semiconductor Manufacturing NYSE: TSM reportedly has pitched a few of the biggest names in the industry, including Intel NASDAQ: INTC, Advanced Micro Devices NASDAQ: AMD, and NVIDIA, about going into a joint venture to operate and run what could be the biggest foundry footprint in the United States. Of course, there are still regulatory, anti-trust, and other loopholes to be jumped through in order to make this happen. Still, the reasoning behind it is what should matter most to investors.

By showing interest in exposing itself to the United States supply chain and its capacity to deliver on semiconductors, Taiwan Semiconductor is aligning itself with the domestic agenda set by President Trump today. More than that, the proposal specifically focuses on running the foundries currently operated by Intel, and that also might mean a vote of confidence in the company itself, especially as a new CEO has been recently appointed for it.

A Special Guest With a Crazy Risk-to-Reward Setup

Among the companies pitched by Taiwan Semiconductor into this joint venture was Advanced Micro Devices, which should get some investors excited today. Advanced Micro Devices has been a laggard in comparison to NVIDIA and others in the semiconductor industry.

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By being a part, even a consideration, to join this project by one of the production leaders in the industry, Advanced Micro Devices could be assumed to have enough technology and prowess worthy of being next to the rest of the leaders in this space, and that’s a factor that might shift the sentiment in this stock to the bullish side.

As it currently trades at only 51% of its 52-week high, investors could see how today’s consensus price target of $155.8 per share set by Wall Street could be an uninterrupted path higher in the coming months, especially as the implications of this joint venture become more mainstream in the broader market.

Taiwan Semiconductor Played Its Chips Right

Previous investors in Taiwan Semiconductor stock, such as Warren Buffett, had pulled out of the company because of the risk of the geopolitical tensions between the United States and China, with Taiwan being in the middle of that fight. Now, President Trump has placed Taiwan Semiconductor between a rock and a hard place, and a decision has been made.

By proposing tariffs on Taiwanese chip exports to the United States, the disruption of Taiwan’s economy and the global semiconductor supply chain wasn’t worth the risk. In response, Taiwan Semiconductor has agreed to invest a net $165 billion in developing the needed infrastructure to build out chips in the United States.

This development, a direct alignment with the United States and a hedge to the China risk, should bring back some investors to the stock; maybe even Warren Buffett might consider repurchasing the stock at the right price. Another factor must be considered by investors today, and that is when analysts will come in to reflect on the future of today’s decision.

As of January, those from Barclays saw Taiwan Semiconductor as an Overweight rating, placing a valuation target of up to $255 per share on it. While this valuation would imply a net rally of as much as 44% from where the stock trades today, the timing of that view does not at all reflect the recent investment and now the proposal of this joint venture.

However, there are other ways for investors to check whether any action has been taken. As of March 2025, particularly during the week of the investment and joint venture announcement, institutional investors from Centaurus Financial decided to boost their holdings in Taiwan Semiconductor stock by 26.3%.

The response to these developments can then be safely assumed to be bullish, and that is also something the market isn’t hiding in its valuation metrics for the company today. Taiwan Semiconductor stock is now valued at a price-to-book (P/B) multiple of 8.1x compared to the rest of the computer sector, which trades at an average P/B of 6.0x.

While some value investors might call this overextended, seasoned professionals will remind them that the market is always willing to overpay for the stocks it believes will outperform the rest of the peer group and even the broader market. Today, there are enough reasons to justify the premium in the stock, something investors should not ignore moving forward.