Nvidia CEO praises TSMC as one of greatest companies

Nvidia CEO Jensen Huang praised Taiwan Semiconductor Manufacturing Co. (TSMC) during a visit to Taiwan, calling the company one of the best in history and suggesting it would be smart to invest in its stock.

TSMC is the world’s largest contract chip manufacturer and a key supplier for Nvidia’s next-generation Rubin AI chip platform.

The visit comes as the US government considers acquiring stakes in tech companies receiving support from the CHIPS Act, though recent reports indicate there are no current plans to seek shares in firms expanding US operations, such as TSMC.

TSMC was promised US$6.6 billion by the US to help build three advanced factories in Arizona.

Huang also said Nvidia is planning to open a new Taiwan office, named “NVIDIA Constellation,” to accommodate its growing workforce in the region.

Separately, Nvidia has reportedly asked some suppliers to halt work on its China-focused H20 chips after security concerns from Beijing, with Foxconn among those affected.

🔗 Source: CNBC

🧠 Food for thought

1️⃣ TSMC’s market dominance creates unique leverage in U.S. semiconductor strategy

TSMC’s overwhelming control of the global foundry market gives the company significant negotiating power with the U.S. government.

The company holds 64.9% of the global semiconductor foundry market share as of Q3 2024, making it indispensable for major U.S. tech companies like Nvidia and Apple 2.

This dominance explains why conflicting reports emerged about U.S. equity stakes. While Commerce Secretary Howard Lutnick discussed potential government ownership, a Wall Street Journal report later said the government had no plans to seek shares in companies increasing U.S. investments 1.

TSMC’s announcement of expanding its U.S. investment to $165 billion in March demonstrates the company’s substantial financial resources, far exceeding the $6.6 billion in CHIPS Act funding they were promised 1.

This financial strength, combined with their market position, allows TSMC to influence the terms of their relationship with the U.S. government rather than simply accept whatever conditions come with federal funding.

2️⃣ Semiconductor industry’s explosive growth drives government investment interest

The semiconductor sector’s unprecedented financial performance explains why governments increasingly view equity stakes as attractive investments beyond strategic considerations.