IGA

Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) stock rebounded nearly 7% in Friday premarket trading after a sharp AI-driven semiconductor selloff, as Taiwan moved to stabilize its equity market and investors reassessed the impact of post-midterm political uncertainty on future data-center demand.

S&P 500 futures rose 0.2% before the bell, providing a firmer backdrop after another difficult session for global chip stocks.

TSMC’s U.S.-listed shares fell 10.78% Thursday, while its Taiwan-listed stock dropped 4.46% to NT$2,140 on Friday.

AI Selloff Hits TSMC and Asian Markets

The decline came as Asian equities followed Wall Street lower after the Nasdaq 100 recorded its largest one-day drop since the 2020 pandemic and the S&P 500 lost roughly $3 trillion in market value.

Semiconductor stocks took some of the heaviest losses as investors questioned whether the changing U.S. political landscape following the midterm elections could slow AI data-center construction.

That concern directly affects contract chipmakers such as TSMC because slower infrastructure development could reduce demand for the advanced processors used in AI servers and related systems.

Taiwan’s benchmark Taiex plunged as much as 9% Friday, entered a bear market and posted its worst weekly performance since 2001 before paring some losses.

TSMC, the index’s heavyweight constituent, helped lead the decline alongside the broader global semiconductor rout.

Taiwan Tightens Short-Selling Rules

Taiwan’s Financial Supervisory Commission moved after Friday’s close to curb selling pressure.

Starting Nov. 9, the regulator will limit intraday short-sale orders involving borrowed securities to 3% of a stock’s average daily trading volume over the previous 30 days, down sharply from 30%, Bloomberg reported on Friday.

The regulator will also raise the minimum margin requirement for short-selling activity to 130% from 90%.

The FSC said heightened global political and economic uncertainty had increased volatility in Taiwanese equities and that the measures were designed to preserve market order and stability.

Government Stands Ready With $15 Billion Fund

Taiwan’s Finance Ministry also said it is prepared to deploy its NT$500 billion ($15 billion) stock stabilization fund if necessary.

The ministry pointed to continued foreign selling as evidence of deteriorating investor confidence.

Foreign investors have sold more than $45 billion of Taiwanese shares so far this quarter, according to Bloomberg-compiled data.

The government’s response follows previous instances in which Taiwan tightened trading rules during periods of severe market stress.

Policy Support Adds a Potential Floor for TSMC

The measures give investors another factor to weigh as TSMC attempts to stabilize after Thursday’s steep decline.

The near-term debate still centers on whether post-midterm scrutiny of AI data centers will merely delay projects or produce a more lasting slowdown in semiconductor demand.

For TSMC, the issue is especially important because its outlook remains closely tied to advanced chip demand from AI infrastructure customers.

The company’s Friday premarket rebound suggests investors are reassessing the severity of the selloff as Taiwan introduces measures aimed at limiting further market dislocation.

Analysts Remain Constructive

TSMC carries a Buy consensus rating with an average price forecast of $559.38.

Recent actions include Bernstein maintaining Outperform while raising its target to $600 on Nov. 4, Barclays maintaining Overweight and lifting its target to $670 on Oct. 16, and DA Davidson maintaining Buy with a $500 target on Oct. 16.

ETF Exposure

TSMC carries a 9.32% weighting in the VanEck Semiconductor ETF (NASDAQ:SMH), 6.28% in the Franklin Income Focus ETF (NYSE:INCM) and 7.32% in the Brown Advisory Flexible Equity ETF (NASDAQ:BAFE).

Large inflows or outflows in those funds could translate into corresponding buying or selling pressure in TSMC.

Price Action

TSM Stock Price Activity: Taiwan Semiconductor shares were up 6.77% at $377.00 during premarket trading on Friday, according to Benzinga Pro data.

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