LS -3x Short Taiwan (STSM) | News Based Sentiment Analysis

• On September 1, 2025, TSMC reported a significant earnings beat, with EPS reaching $2.47, exceeding analyst expectations of $2.13 by $0.34. Revenue also surpassed expectations at $30.07 billion, compared to the anticipated $28.50 billion, marking a substantial 44.4% year-over-year increase – demonstrating strong demand for their chip manufacturing services.
• Institutional investors showed increased confidence in TSMC, with Point72 Europe London LLP increasing its stake by 65.4%, acquiring 49,250 shares valued at $20.68 million, and Goldman Sachs raising its holdings by 55.6%, adding 6.18 million shares worth nearly $2.87 billion. This influx of investment signals positive sentiment towards the company's future prospects.
• Following the strong Q3 2025 earnings, TSMC increased its quarterly dividend to $0.8348 per share, representing a 1.4% yield, as confirmed on August 31, 2025. This demonstrates a commitment to returning value to shareholders and reinforces investor confidence.
• However, TSMC faced headwinds on August 28, 2025, as its shares declined amid trade secret theft charges against three individuals, including a former engineer, related to their advanced 2-nanometer technology. This incident raises concerns about intellectual property protection and potential competitive disadvantages.
• In response to the trade secret theft concerns, TSMC announced on August 29, 2025, its plan to market a proprietary trade secret management system to companies in Europe and the United States. This proactive measure aims to bolster security and foster innovation within the supply chain, having already been adopted by 20 firms including ASE Technology Holding Co.
• Prosecutors filed charges on August 28, 2025, alleging that trade secrets related to TSMC’s 2-nanometer chip process were stolen with the intent to aid Tokyo Electron's Taiwan subsidiary in securing contracts. They are seeking a 14-year prison sentence for the former engineer involved.
• Analysts remain optimistic about TSMC, with Susquehanna raising its price target from $255.00 to $265.00 on September 1, 2025, while Citigroup reaffirmed a "buy" rating. The average analyst price target stands at $258.33, with a range of $210 to $306.

The Investment Story: TSMC delivered a robust Q3 2025, fueled by strong demand and institutional investment, but faced a setback with trade secret theft allegations. The company is proactively addressing security concerns while maintaining a positive outlook according to analysts.

What It Means for Investors: Despite the legal challenges, TSMC's strong financial performance and increased institutional confidence suggest continued growth potential. The dividend increase and analyst upgrades further support a positive investment outlook, though investors should monitor the trade secret case closely.

Looking Ahead: Investors should watch for updates on the trade secret theft case and its potential impact on TSMC's competitive advantage. Monitoring Nvidia's China revenue challenges, as they also impacted sentiment in August, will also be crucial.

The Bottom Line: TSMC remains a dominant force in the semiconductor industry, demonstrating resilience through strong earnings and proactive security measures. While the trade secret theft is a concern, the company's overall outlook remains positive, making it a compelling investment for those seeking exposure to the growing chip market.