TSMC faces chip selloff despite S&P’s positive outlook

S&P Global Ratings revised its outlook on Taiwan Semiconductor Manufacturing Company ↘ 1.02% to positive from stable on June 23, affirming the chipmaker's AA- long-term issuer credit rating, a move that has drawn renewed investor focus as TSMC navigates a volatile stretch for semiconductor stocks.

Credit Strength Amid AI Boom

The ratings agency cited TSMC's strengthened leadership in semiconductor foundry services for advanced high-performance computing chips, along with improving EBITDA and free operating cash flow generation. S&P estimated that AI processors — including GPUs, AI accelerators, and CPUs — accounted for 22% to 25% of TSMC's 2025 revenue. The agency expects TSMC to generate free operating cash flow of NT$1.6 trillion in 2026 and NT$1.9 trillion in 2027.investing+2

The positive outlook signals a potential upgrade in the coming months. The action follows a period of strong performance for TSMC, which has seen its stock gain over 45% year-to-date amid surging AI chip demand. The company also raised its quarterly dividend to $1.1136 per share from $0.95, a 17% increase that reinforced investor confidence.borderless+3

Samsung Selloff Hits Chip Stocks

TSMC shares had rallied on Monday as part of a broader market advance that lifted the Dow Jones Industrial Average to a record above 53,000. But the gains reversed on Tuesday after Samsung Electronics reported quarterly results that, while showing operating profits up 19-fold, failed to meet elevated buy-side expectations for AI spending.finance.yahoo+2

Samsung shares tumbled as much as 10% in Seoul, dragging the Kospi down nearly 5% and sparking a global chip selloff. Nasdaq 100 futures fell about 1%, while the S&P 500 and Nasdaq Composite declined 0.1% and 0.5% respectively on the day.bloomberg+2

Analyst Consensus Remains Bullish

Despite the Tuesday pullback, Wall Street remains broadly constructive on TSMC ahead of its second-quarter earnings report scheduled for July 16. Barclays analyst Simon Coles recently raised his price target from $470 to $625, while the consensus target from 18 analysts sits at approximately $490, implying upside from recent levels. Analysts expect Q2 revenue to reach $40 billion, up from $30 billion a year ago.tipranks+1