Chip stocks resisted Monday’s defeat in the broader market, after a report that a major chip maker will increase its capital spending in 2021 to deal with a new generation of products.
TSM of Taiwan Semiconductor Manufacturing Co.,
It is expected to announce a $ 22 billion capital expenditure plan for 2021, about 10% higher than previously estimated, at an event on Thursday, according to Taiwanese media reports. TSMC serves as a manufacturer for large chip companies, such as Advanced Micro Devices Inc. AMD,
and Nvidia Corp. NVDA,
that don’t have their own factories.
TSMC shares traded in the U.S. ended up 2.4% higher on Monday, while the PHLX Semiconductor SOX index,
ended with a drop of 0.4%, compared to a drop of 1.5% in the S&P 500 SPX index,
and the high-tech Nasdaq Composite Index COMP,
The increase in TSMC’s capital expenditures is expected to support the company’s expansion into 5-nanometer chips, as well as developing the capacity for even smaller architectures. Currently, companies like AMD recently launched 7nm chips, while other companies like Intel Corp. INTC,
have been struggling to reach them. In chip jargon, nanometers, 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 energy efficient.
Notably, companies that supply the materials and make the equipment used by manufacturers like TSMC saw their stocks rise on Monday. Lam Research Corp. LRCX,
shares rose 1.2%, KLA Corp. KLAC,
shares advanced 0.6%, Applied Materials Inc. AMAT,
the shares rose 0.7% and the US shares of ASML Holding NV ASML,
gained 2.5%.
Meanwhile, AMD shares rose 0.6%, Nvidia shares rose 0.5%, while Intel shares fell 0.3%.