Taiwan Semiconductor Stock Rises Amid Leadership Changes at Intel

Shares of Taiwan Semiconductor (TSM 4.79%) experienced an uptick today, despite the absence of any specific news regarding the company. Instead, investors reacted favorably to the announcement that Intel CEO Pat Gelsinger has retired over the weekend, reportedly after facing pressure due to lackluster stock performance during his leadership.

As of 1:10 p.m. ET, TSMC's stock was up 5.2%. Interestingly, Intel's stock also benefited from the news, rising by 3.5% at the same time.

Gelsinger's Departure: A Positive Sign for Intel's Competitors

Pat Gelsinger's tenure as Intel CEO was marked by a significant initiative to expand Intel's foundry operations to cater to outside customers, which closely mirrored TSMC's successful business model. This strategy was crucial for Intel in obtaining billions in funding from the CHIPS Act.

Gelsinger aimed to position Intel as the world’s second-largest contract chip manufacturer after TSMC. However, with his departure, doubts arise about the future of this ambition.

While Intel has not clarified its plans for the Foundry Services sector, any delays in their development could potentially benefit TSMC. Intel's press release confirmed that the leadership structure of their foundry division remains unchanged.

TSMC's Market Position Remains Strong

TSMC maintains a commanding lead in the contract chip market, holding over 50% of the market share for third-party chip manufacturing, and around 90% in advanced chip manufacturing. Under Gelsinger, Intel emerged as a significant rival, but Gelsinger’s exit may reduce this competitive pressure.

Furthermore, Intel continues to face substantial financial losses in its foundry business, and the next CEO may view this sector differently. Overall, the developments with Intel's leadership are favorable for TSMC and solidify its position in the industry.

Note: The author has no investments in any of the mentioned stocks. The Motley Fool has investment positions in and recommends both Intel and Taiwan Semiconductor Manufacturing.

TSMC, Intel, stocks