TSMC Stages a Rebound on Export Surge and Local Buying, Even as Foreign Investors Stay on the Sidelines

TSMC shares rose 3.4% in European trade, but foreign institutional investors remained net sellers. Rally driven by record South Korea chip exports (+180%) and TSMC's $100B US expansion plan.

The chipmaking giant recouped some of last week’s losses on Tuesday, with shares climbing 3.40% to €365.00 in European trading, after closing at €353.00 on Monday. The bounce was part of a broader recovery across Asian semiconductor stocks, triggered by a sharp turnaround in South Korean markets and reinforced by blockbuster export data that underscored the depth of AI-driven demand. Yet beneath the surface, the rally had an unusual character: international institutional investors remained net sellers, offloading a further NT$4.33 billion in TSMC stock on the day, following NT$6.03 billion in outflows on Monday. The buying came instead from local Taiwanese investors, a pattern that suggests the rebound is not yet endorsed by the global capital that had driven the stock to its highs.

Taiwan’s Taiex index recorded its largest single-day gain in history, soaring as TSMC alone contributed roughly 720 points to the move. The broader MSCI Asia Pacific Index rose 2.2%, Japan’s Nikkei 225 recovered 2.7% from correction territory, and South Korea’s Kospi closed 3.56% higher at 6,747.95 after a midday rally so violent that program trading was suspended for five minutes. Leading the charge were SK Hynix and Samsung Electronics, with Taiwan’s electronics and semiconductor sub-indices following with gains of 4.81% and 4.50% respectively.

The catalyst for the regional rebound came in part from fresh trade data out of Seoul. South Korea’s overall exports in the first 20 days of July jumped 52.3% year-on-year, but the headline was the semiconductor line: chip exports surged 180% to $22.1 billion, pushing the value of total outbound shipments to $54.9 billion, compared with $36 billion in the same period last year. For analysts, the numbers reinforce the view that the prior week’s sell-off in chip stocks was a profit-taking exercise rather than the end of the AI investment cycle. “TSMC was one of the top picks today after being heavily punished alongside overseas chip stocks last week,” a market commentator noted, adding that the fundamentals remain solid in the AI era.

The export surge comes at a time when TSMC is doubling down on its physical footprint in the United States. Only days after posting record quarterly results, the company announced an additional $100 billion investment in its Arizona operations, bringing the total planned outlay to $265 billion. Chief executive C.C. Wei cited robust, multi-year demand for AI chips and strong customer orders as the rationale for the expansion. The new capital will fund four additional advanced fabrication plants, potentially giving TSMC a total of ten fabs and two packaging facilities in the state, and raising its overall US presence to twelve sites. The company acknowledged operational hurdles, including a shortage of construction workers in Arizona, but finance chief Wendell Huang expressed satisfaction with the progress on the ground. TSMC emphasized that the most advanced manufacturing nodes will still be ramped in Taiwan first, reflecting the priority it places on the tight integration of R&D with its home production base.

The investment decision sits atop a quarter of exceptional financial performance. For the second quarter of 2026, TSMC reported record revenue of $40.2 billion, up 34% year-on-year, and net profit of $22 billion that beat analyst expectations. Diluted earnings per share climbed 77.4% from a year earlier, and gross margin reached a robust 68%, driven by the high-performance computing segment — a category that includes AI accelerators and custom chips. Fueled by that momentum, management raised its full-year 2026 revenue growth forecast to slightly more than 40% in US dollars, and lifted its capital expenditure budget for the year to a range of $60 billion to $64 billion, an $8 billion increase from the previous target.

Despite those headline numbers, the stock had drifted lower in the sessions immediately following the earnings release. Market observers attributed the weakness to expectations that were already priced in, as well as to the margin guidance for the third quarter. TSMC projected a gross margin of 66% for the current period — a modest decline from the second quarter’s 68% — which, combined with the higher capex plan, weighed on sentiment. Tuesday’s rebound partly reversed that slide, but the shares remain 13.20% below the 52-week high of €420.50 reached on July 1. Over the past 30 days, the stock is still down 10.87%, although it has gained 42.02% year-to-date.

The tension between near-term margin concerns and a long-term investment cycle of unprecedented scale now defines TSMC’s market narrative. Local Taiwanese buyers have stepped in to support the stock after a sharp correction, but the continued pullback by foreign money suggests lingering skepticism about whether the earnings trajectory can justify the capex bill. The bet on Arizona, backed by record shipments of AI chips out of Asia, is clear; the question is how long the market will wait for the payoff. The answer may hinge on whether the third-quarter gross margin holds at 66%, and whether the broader chip export recovery can sustain the momentum that sent TSMC shares — and the entire semiconductor complex — back into positive territory this week.