As Taiwan Semiconductor Manufacturing Co. (TSMC) faces the possibility of losing its standing as Asia’s largest company by market value to Tencent Holdings Ltd., investor attention seems to be shifting towards the latter’s escalating focus on artificial intelligence.
The landscape has dramatically shifted this year, with TSMC’s shares sliding 11%, following the trend of declining global chip stocks, including Nvidia Corp., as skepticism grows around the lofty valuations in the sector.
In stark contrast, Tencent’s shares have surged by about 30% so far this year, significantly reducing the market capitalization gap with TSMC to approximately $109 billion, marking the narrowest margin since late 2023.
Despite not yet reaching its peak stock levels from 2021, Tencent has weathered the storm better than many of its Chinese tech peers, emerging relatively unscathed from Beijing’s stringent regulatory actions in recent years. The company recently detailed plans to significantly boost its AI infrastructure investment, coinciding with its most robust revenue growth pace since 2023.
Market data reveals a discernible shift in TSMC’s investor base. Since February 24, global investment funds have systematically trimmed their exposure to TSMC, offloading a net NT$190.4 billion ($5.8 billion) worth of shares, as gathered by Bloomberg. Foreign ownership of TSMC shares has dipped to 72.7% as of Wednesday, the lowest level witnessed since the end of 2023.
The January 2025 debut of DeepSeek has undeniably shaken the U.S. tech market, introducing a powerful new player in the artificial intelligence arena. DeepSeek’s rapid ascent, marked by its efficient and cost-effective AI models, has generated significant ripples, particularly in the realm of large language models. The fact that Deepseek models have shown very strong performance, while having lower training costs than many competing models, has caused big waves in the investment community. This has caused a reassessment of where future AI growth will occur.
This disruption has, in turn, amplified the attractiveness of Asian tech stocks. DeepSeek’s success underscores the growing AI capabilities within Asia, signaling a potential shift in the global tech landscape. Investors are increasingly recognizing the innovative potential and competitive edge of Asian tech companies, especially those involved in AI development.
The combination of strong technical ability, and the drive to compete on the world stage, has caused many investors to look towards Asian markets. This has been amplified by the very competitive pricing models that Deepseek has brought to the market.
As of 4Q24, TSMC had 67% of global foundry market share, the largest in the world. Samsung Foundry followed in second place, but just 11%. UMC, SMIC and GlobalFoundries each had 5% in market share, according to Counterpoint research .
