Taiwan Semiconductor Stock Gains After Intel CEO Changes

Shares of Taiwan Semiconductor (TSM) saw an increase today, despite the absence of any direct news related to the company. The rise in share price appears to be tied to the recent retirement of Intel CEO Pat Gelsinger over the weekend. Reports suggest that Gelsinger's exit was a result of the company's struggles during his leadership.

As of 1:10 p.m. ET, Taiwan Semiconductor's stock rose by 5.2%. Interestingly, Intel's stock also saw a rise, climbing by 3.5% around the same time.

Implications of Gelsinger's Departure for Intel

Gelsinger had been known for his initiative to expand Intel's foundry business, which aimed to offer chip manufacturing services to external customers much like TSMC. This move was crucial for Intel in securing significant funding from the CHIPS Act.

Gelsinger had set a target for Intel to become the second-largest contract chip manufacturer worldwide, following TSMC. However, with his resignation, that ambition appears to be now uncertain.

The future of Intel Foundry Services is unclear, and any potential delays in its expansion plans could favor TSMC in the competitive landscape. Intel’s announcement regarding Gelsinger’s retirement noted that the leadership structure of its foundry operations will remain unchanged.

TSMC's Competitive Edge Remains Intakt

TSMC currently dominates the contract chip manufacturing industry, holding more than 50% of the market share in third-party chip production and around 90% in advanced chip manufacturing. Under Gelsinger, Intel was viewed as a significant competitor, but this risk has now diminished.

Despite Intel continuing to incur substantial losses each quarter within its foundry segment, the next CEO may not perceive it as a growth opportunity. Overall, today’s developments are likely to be viewed positively by TSMC's investors.

Note: The author has no investment position in any of the stocks mentioned here. The Motley Fool has positions in and recommends both Intel and Taiwan Semiconductor Manufacturing.

Taiwan, Semiconductor, Intel