Investor Confidence in TSMC Faces a Regulatory Test

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A surge in retail investment has propelled the shareholder count at Taiwan Semiconductor Manufacturing Company (TSMC) to an eight-month peak. This wave of buying from smaller investors underscores a bold bet on the chipmaker's future, even as new geopolitical challenges threaten to complicate its international expansion strategy more severely than previously anticipated.

Recent shareholder registry data reveals a significant climb, with the number of TSMC investors reaching 1.88 million—a level not seen since April. This increase has been largely driven by private individuals who have been actively accumulating shares, viewing recent price dips as an attractive entry point. Their behavior, which contrasts with a degree of hesitation among some institutional players, signals strong underlying faith in the company's long-term market dominance, despite short-term volatility.

The "N-2" Rule: A Potential Speed Bump

However, this investor optimism is being tempered by reports of potential tightening in Taiwan's export regulations. Authorities are considering strict enforcement of a so-called "N-2 rule." This policy would mandate that TSMC's overseas facilities—such as its plant in Arizona—must operate technology that is consistently two generations behind its most advanced production in Taiwan. The market had generally assumed a one-generation gap. Such a restriction could impair the competitiveness of TSMC's U.S. operations, even as the local subsidiary has moved to assure stability by confirming its board of directors.

Apple Provides a Foundational Cushion

Despite these regulatory headwinds, analyst sentiment remains largely positive. A key pillar of this confidence is TSMC's anchor customer, Apple. The iPhone maker has already secured substantial production capacity for TSMC's upcoming 2-nanometer technology. This provides the chip giant with a reliable revenue base, making it less susceptible to fluctuations in other segments like AI servers. With operating margins nearing 50% and a commanding market share exceeding 60% in advanced chips, TSMC's equity is still viewed as a more robust sector choice compared to rivals like Intel. Shares closed at €247.00 on Friday, maintaining a year-to-date gain of approximately 25%.

All eyes are now turning to January 15, 2026. The upcoming quarterly earnings report will be crucial, as market participants await management's commentary on the potential impact of the "N-2" restrictions and whether the timeline for international fab expansion requires adjustment.