Taiwan Semiconductor Manufacturing (TSM) was one of the biggest drags on Asian chip stocks on Monday, October 19, as a Bloomberg gauge of the region’s chipmakers fell more than 2% to its lowest level since July. Bloomberg tied the selloff to two worries. One is whether US AI infrastructure can keep raising money, with CoreWeave (CRWV) at the center of that debate. The other is a weekend update to DeepSeek’s V4.1-Flash model, which the Chinese lab says finishes tasks faster.
The selling eased by the close. Taiwan’s Taiex finished down 0.61% at 46,822.08 after falling about 2% intraday, and TSMC’s Taiwan-listed shares recovered from a dip to NT$2,390 to close unchanged at NT$2,420.
The Fear Behind TSMC’s Slide
The bear case goes like this. If lenders pull back from AI cloud operators like CoreWeave, data center budgets shrink, and orders slow for the chips TSMC builds for Nvidia (NVDA) and others. Leaner AI models add a second risk: if they do the same work with less hardware, buyers need fewer chips.
Neither worry is new. The timing is what stands out: TSMC reported results just four days earlier, on October 15.
What TSMC’s Numbers Say
TSMC’s third-quarter revenue came in at US$46.72 billion, up 41.2% in dollar terms, and net income jumped 68.7%. CEO C.C. Wei called demand for its leading-edge technologies “extremely robust.”
TIKR’s data shows quarterly revenue rising from $32.48 billion a year earlier to $46.84 billion, a 44% gain. Gross margin climbed from 59.45% to 66.41% over the same stretch.
That’s a roughly 7-percentage-point margin gain in a year, even with the costly early ramp of 2-nanometer chips pulling third-quarter margin down from the prior quarter. These are September-quarter numbers, so they predate October’s funding scare. TSMC’s fourth-quarter guidance of $52.3 billion to $54.3 billion, issued on October 15, implies about 58% growth at the midpoint.
TSMC Stock Already Prices In the Doubt
The market isn’t ignoring the fear. TSMC stock trades at 17.07x forward normalized earnings, about 12% below its three-year average of 19.31x and down from roughly 20x at the start of October. That’s its lowest multiple since mid-2025.
So investors are paying less for each dollar of TSMC’s earnings just as those earnings grow at their fastest pace in years. That discount only turns into upside if the funding worry stays a worry and never shows up in orders.
The DeepSeek angle doesn’t let TSMC off the hook. DeepSeek’s technical documentation pairs V4.1-Flash’s memory and storage savings with lower compute for processing inputs, so the efficiency argument isn’t limited to memory makers like Micron (MU).
Meta’s Wednesday Call Matters for TSMC
TSMC’s own numbers won’t settle this. Its customers’ spending plans will. Meta Platforms (META) reports on Wednesday, October 21, and any early word on 2027 capital spending is the first big read on whether AI budgets are still rising. A higher number makes 17x look too cheap for a company guiding to nearly 58% growth. A cut would put chip demand back in question, though what it means for TSMC depends on why Meta trimmed and which purchases it pulled back.
You can pull up TSMC’s quarterly margins and its forward multiple history on TIKR for free, and check them against any chipmaker you follow. Learn more here.
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