Chip stocks are resisting Monday’s defeat in the broader market following a report that a major chip maker will increase its capital expenditures in 2021 to tackle a new generation of products.
Taiwan Semiconductor Manufacturing Co. TSM,
will reportedly announce a 2021 investment plan of $ 22 billion, about 10% higher than previously estimated, at an event on Thursday, according to Taiwanese media reports. TSMC acts as a manufacturer for major chip companies such as Advanced Micro Devices Inc. AMD,
and Nvidia Corp. NVDA,
that do not have their own factories.
US-traded shares of TSMC finished 2.4% Monday, while the PHLX Semiconductor Index SOX,
0.4% closed, compared to a 1.5% decline in both the S&P 500 index SPX,
and technically demanding Nasdaq Composite Index COMP,
TSMC’s capital expenditures are expected to support the company’s expansion to 5 nanometer chips and develop the capacity for even smaller architectures. Currently, companies like AMD have recently introduced 7nm chips, while other companies like Intel Corp. INTC,
have trouble catching up. In chip language, nanometer or nm refers to the size of the transistors that go on a computer chip, with the general rule that smaller transistors are faster and more efficient at using current.
Companies that supply the materials and make the equipment that manufacturers such as TSMC use, in particular, saw their share rise on Monday. Lam Research Corp. LRCX,
shares rose 1.2%, KLA Corp. KLAC,
shares advanced 0.6%, Applied Materials Inc. AMAT,
shares rose 0.7% and US shares of ASML Holding NV ASML,
2.5% gained.
Meanwhile, AMD shares gained 0.6%, shares of Nvidia were up 0.5%, while Intel shares were down 0.3%.