Taiwan Semiconductor (NYSE:TSM) could beat risk as tensions between China and Taiwan escalate.
TSM – Daily Chart
The price of TSM has resistance around the current level which could be important over the next few days. The stock will have to show an ability to get above that hurdle to continue further.
A record 125 Chinese aircraft were involved in military exercises which surrounded Taiwan, according to the island’s defence ministry.
China said the Joint Sword 2024-B exercise was a warning in response to Taiwan’s president reiterating the country’s sovereignty on its national day last week.
“This is a resolute punishment for Lai Ching-te’s continuous fabrication of ‘Taiwan independence’ nonsense,” said China’s Taiwan affairs office.
Taiwan’s defence ministry claimed 90 Chinese aircraft had entered its air defence zone, including planes, helicopters, and drones, and that the overall figure of 125 was a single-day record. Seventeen warships and the Liaoning aircraft carrier were also involved.
A map on China state broadcaster CCTV showed six blocks encircling Taiwan, circles around outlying islands, and a jet leaving an aircraft carrier.
The latest escalation comes at a time of heightened global tensions and the issue could be a risk for Taiwan Semiconductor and the chip industry. Taiwan is a vital cog in the global supply chain and a US congressman, Seth Moulton, said previously that if China invades,
“We’re going to blow up TSMC”. Moulton added later that he had discussed several options for conveying the enormous costs of invading Taiwan to Beijing. TSMC is the cornerstone of what’s been called Taiwan’s “silicon shield” – the belief that the world’s dependence on its chips protects it from invasion by China. Taiwan manufactures 60% of the world’s chips and up to 90% of the most important chips.
China may not want to look weak on the world stage and investors should keep an eye on this stock as it tests the yearly high price.
