Chip stocks resisted Monday’s fall in the broader market following a report that a major chip maker will increase its capital spending in 2021 to cope with a new generation of products.
Taiwan Semiconductor Manufacturing Co. TSM,
It reportedly announced a $ 22 billion capital spending plan for 2021 on Thursday, about 10 percent more than previously estimated. TSMC acts as a manufacturer of large chip companies such as Advanced Micro Devices Inc. AMD,
and Nvidia Corp. NVDA,
which do not have their own manufacturing plants.
Shares in the US of TSMC traded up 2.4% on Monday, while the PHLX Semiconductor Index SOX,
closed 0.4%, compared to a decrease of 1.5% in both the SP&S 500 index,
and Nasdaq compact composite index,
The increase in TSMC’s capital expenditure is expected to support the company’s expansion into 5-nanometer chips, as well as capacity development for even smaller architectures. Currently, companies like AMD have recently introduced 7 nm chips, while other companies like Intel Corp. INTC,
they have struggled to catch up. In terms of chip, nanometers, or nm, refer to the size of transistors that pass through a computer chip, with the general rule that smaller transistors are faster and more efficient in power usage.
In particular, companies that supply materials and manufacture equipment used by manufacturers such as TSMC saw their stock rise on Monday. Lam Research Corp. LRCX,
shares rose 1.2%, KLA Corp. KLAC,
0.6% advanced shares, Applied Materials Inc. AMAT,
shares rose 0.7% and US shares of ASML Holding NV ASML,
gained 2.5%.
Meanwhile, shares of AMD gained 0.6%, shares of Nvidia rose 0.5%, while shares of Intel fell 0.3%.