The Taiwan-listed shares of Taiwan Semiconductor Manufacturing (TSMC) after U.S.-based chipmaker Intel confirmed that it is going to postpone the release of its next-generation chips.

On July 27, the Taiwan-listed stock of Taiwan Semiconductor Manufacturing Co Ltd (TPE: 2330) rallied. The TSMC stock rally happened after U.S.-based chipmaker Intel Corporation (NASDAQ: INTC) confirmed that it is facing delays for its next-generation chips. Intel said that it might have to outsource some of the production.

TSMC jumped almost 10% higher reaching the level of 424.50 Taiwan dollars ($14.48). That is an all-time high for this stock. Since July 24’s close, TSMC has gained 998.32 billion Taiwan dollars ($34.05 billion) in its market capitalization.

Since the past week, the Taiwanese chipmaker got a major boost after Intel announced that it would delay the release of chips that have the renowned 7-nanometer transistors. These new chips are believed to provide higher performance than the predecessor generations.

Intel is already lagging behind its competitors like AMD Inc (NASDAQ: AMD). The U.S. chip giant said that it had discovered a problem in its 7-nanometer manufacturing process. the company’s management said during its Q2 earnings call that it had come up with “contingency plans” that include looking at outside manufacturers to deliver these semiconductors.

What Boosts TSMC Stock

TSMC is a popularly known foundry. Thus, it makes chips that other companies design. Apple Inc (NASDAQ: AAPL) is a notable customer served by the company. Although Intel is yet to name any potential third parties to manufacture its semiconductors, analysts and commentators see TSMC as a major contender.

The managing director of research at China Renaissance Securities, Szeho Ng, told reporters:

“Chip outsourcing to foundries now its (Intel’s) contingency plan, which opens up a TAM (total addressable market) of approx. US$20bn to TSMC and puts more fuel to the advanced foundry market already running tight.”

He also said that TSMC quite literally monopolizes the space while pointing to the manufacture of chips with the 7-nanometer process. Another firm that operates a foundry business, Samsung Electronics Co Ltd (KRX: 005930) may also probably take a segment of Intel’s business. Its shares also gained more than 2% on July 27.

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Wanguba Muriuki

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