Taiwan chip stocks climb after Nvidia announces $150 billion spending plans

Nvidia is making a significant leap in Taiwan, as CEO Jensen Huang revealed plans for a new campus and an astounding tenfold increase in annual investments. This announcement, made on Wednesday, aims to fuel growth driven by artificial intelligence technologies. In response to the news, Taiwan's Taiex stock index soared by 1.7%, reaching an all-time high. The boost was further supported by the milestone achievements of South Korea's SK Hynix and U.S.-based Micron, both of which have recently crossed the $1 trillion mark in market capitalization. Huang stated, "Now we're spending $100 billion, going to $150 billion in Taiwan each year," highlighting a dramatic rise from the previous $10 to $15 billion spent annually just four to five years ago. The tech giant is set to break ground on a new office complex named Constellation, designed to house 4,000 employees in northern Taipei, projected to be operational by 2030. This expansion would quadruple Nvidia's current workforce in Taiwan. Among the notable gains in the semiconductor sector, shares of Taiwan Semiconductor Manufacturing Company (TSMC) increased by 1.3%, while MediaTek and Delta Electronics saw jumps of 8.8% and 7.2%, respectively. These companies dominate the Taiex index by market capitalization. While Nvidia specializes in chip design, TSMC is responsible for their production, and Nvidia is on track to surpass Apple as TSMC's largest client this year. The proposed $150 billion annual investment represents one of Nvidia's most substantial spending initiatives and exceeds its quarterly revenue. The company recently reported a record revenue of $81.6 billion for the quarter ending April 26 and anticipates $91 billion for the current quarter. Additionally, Nvidia plans to infuse $500 billion into AI infrastructure in the U.S. over four years, translating to an average of $125 billion per year in domestic value creation. This ambitious investment comes amid increasing regulatory challenges for Nvidia in the Chinese market, where revenue from Taiwan surged over 50% year-on-year, while earnings from mainland China and Hong Kong plummeted by half. In light of this, shares of major Chinese chip manufacturers such as SMIC fell sharply, with Cambricon and Hygon reporting declines of 5% and 7%, respectively. Earlier this week, Chinese telecom giant Huawei announced a new method for producing advanced semiconductors, which initially boosted their stock prices. The company plans to implement its innovative "LogicFolding" technology in a smartphone chip this fall and in its Ascend chips for data centers by 2030. Venture capitalist Chamath Palihapitiya recently suggested that Taiwan’s dominance in global semiconductor development could wane within 18 months, citing advancements from U.S.-based Neuralink. However, Huang emphasized Taiwan's pivotal role in the AI revolution, predicting that the integration of AI with hardware will revolutionize manufacturing processes, benefiting local partners with transformative technologies.