TSMC shares drop as chip sector selloff deepens

Shares of Taiwan Semiconductor Manufacturing Company ↘ 1.20% fell sharply on Tuesday, declining nearly 5% in morning trading as the global semiconductor sector continued a volatile stretch marked by aggressive profit-taking and shifting investor sentiment around artificial intelligence stocks.

Chip Giant Caught in Rotation

TSMC's American depositary receipts traded around $430 on Tuesday morning, according to Benzinga, retreating after the stock had closed at $451.79 on Monday. The decline came as hedge funds sold tech hardware stocks for a fourth consecutive week, according to a Goldman Sachs The Goldman Sachs Group, Inc. ↘ 1.38% client note cited by Reuters.reuters+2

The selloff follows a turbulent start to July for semiconductor stocks. The PHLX Semiconductor Index fell more than 11% over two sessions on July 1-2, with the VanEck Semiconductor ETF ↘ 1.00% capping its best first half ever — an 82% surge — before reversing hard. Micron Technology ↘ 2.22%, Marvell Technology ↘ 0.56%, and Intel ↘ 1.02% were among the hardest hit during the initial rout.CHOSUNBIZ+3

Warning Signs Accumulate

CNBC reported Sunday that semiconductor stocks are flashing warning signs of a possible top. BTIG chief market technician Jonathan Krinsky noted that the iShares Semiconductor ETF ↘ 1.23% logged daily moves of at least 3.9% in six of the previous sessions. "This sort of extreme volatility near a high at best suggests a long period of consolidation, and at worst a more meaningful top," Krinsky said.CNBC

The catalysts behind the broader selloff include a Bloomberg report that Meta Platforms ↗ 1.02% plans to sell excess AI computing capacity, raising questions about whether hyperscalers have overbuilt chip infrastructure. A weaker-than-expected June jobs report — just 57,000 payrolls added — also muddied the macro outlook.ECIKS.org+1

Earnings Loom

Despite the pullback, TSMC retains a near-unanimous Buy rating among analysts, with Citi recently raising its price target ahead of second-quarter earnings scheduled for July 16. The company's stock has still returned roughly 86% over the past year, and RenMac's Jeff deGraaf noted that while semiconductors have entered "bubble territory," the broader market has not.MarketChameleon.com+3