TSMC and UMC Chip Stock Selloff After Democratic Midterm Wins, Digi Mart USA News: Taiwan Semiconductor Manufacturing (TSM) fell 10% today as the chip selloff entered a second day, while Taiwan neighbor United Microelectronics (UMC) dropped 16%.
TSMC had no news of its own. Investors cited Democrats’ larger-than-expected midterm wins, which raised fears of a slower AI build-out.
Qualcomm, a TSMC customer, also warned on memory costs after Wednesday’s close, and Bloomberg reported that Micron had paused a $4.5 billion Taiwan plant.
Lam Research (LRCX), which gets 18% of its revenue from customers in Taiwan, fell 10%. Bloom Energy (BE) fell 17% despite announcing a 900 MW fuel cell deal with NTT DATA.
UMC reported that October revenue rose 18.3% from a year earlier to NT$25.2 billion, faster than its 16.3% growth for the year so far, yet the stock still sank. Chip packager ASE Technology (ASX) fell 19%, even though its third-quarter revenue rose 44.8% from a year earlier to NT$244.2 billion and its packaging and testing gross margin improved to 30.6% from 27.3% in the second quarter.
Analysts still expect TSMC’s earnings per share to nearly triple from 2025 to 2028. TSMC traded at 16 times forward earnings before today’s decline, below its five-year average of 18 times.
TSMC’s revenue has risen every quarter since early 2025.
TSMC’s October sales, due next week, will be the first read on its fourth-quarter guidance of $52.3 billion to $54.3 billion. The company guided 2026 capital spending to $60 billion to $64 billion.
Lam guided December-quarter revenue to $8.60 billion, up from $8.22 billion in the September quarter. The commentary notes that investors selling Lam today are betting on a spending cut TSMC has not announced.
The author’s view is that investors are selling TSMC on a political risk that has not yet appeared in its numbers. TSMC’s 2027 guidance in mid-January will be the first sign if AI spending does slow.
