Strong Market Position Shields TSMC (TSM) from Geopolitical Headwinds

Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) is one of the most profitable tech stocks to invest in now. On August 26, Nikkei Asia reported that Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) is phasing out Chinese chipmaking equipment from its most advanced plants. The decision reflects preparation for potential U.S. restrictions that could affect production and market access. The company is removing Chinese tools from its new 2-nanometer lines, which are scheduled to begin mass output this year.

This move follows a push by U.S. lawmakers to limit technology that could benefit China’s strategic industries. The proposed Chip EQUIP Act would also bar companies receiving U.S. subsidies from using equipment sourced from foreign entities of concern, including Chinese suppliers.

The restrictions primarily target chips with 7nm or smaller dimensions, which are critical for AI data centers. Taiwan Semiconductor Manufacturing Company Ltd.’s (NYSE:TSM) decision to act now is seen as a way to preserve subsidy eligibility while also lowering regulatory and operational risks.

Even with these geopolitical headwinds, Taiwan Semiconductor Manufacturing Company Ltd. (NYSE: TSM) remains central to the global semiconductor supply chain, given its dominant position in advanced manufacturing. The consensus price target suggests a potential upside of around 15% from current levels.

Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) is the largest dedicated semiconductor foundry in the world, producing advanced integrated circuits for global industries including technology, communications, and automotive.

While we acknowledge the potential of TSM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.