🧠 Food for thought

Implications, context, and why it matters.

TSMC’s reach goes well beyond Taiwan’s stock market

• TSMC accounts for 12.5% of the MSCI Emerging Markets Index, a widely tracked benchmark for developing markets 1.
• That level of concentration leaves investors in broad emerging market funds with heavy exposure to one company.
• In 2024, TSMC drove nearly half of the index’s total return 2.
• Exchange-traded funds such as the iShares MSCI Emerging Markets ETF (EEM) already hold double-digit stakes in TSMC, which weakens their value as a way to spread risk away from US tech stocks 3.

TSMC’s grip on advanced chips can slow big tech’s AI plans

• The rule change could send more money into TSMC, even as Amazon, Microsoft, and Google say demand for AI chips is running ahead of supply 4.
• Part of the squeeze comes from restrained spending. TSMC’s capital spending was mostly flat and fell year over year in 2023 and 2024. New chip fabrication plants also take years to build 4.
• TSMC holds more than 80% of the global market for leading-edge semiconductors, so it has room to keep investment in check and avoid building too much capacity if AI demand cools 2.
• That approach pushes more risk onto large cloud computing companies, which can miss revenue when customer demand outruns chip supply 4.