Taiwan Semiconductor Faces Troubling Technical and Political Challenges

Taiwan Semiconductor TSM has triggered a technical Death Cross, which is adding to investor concerns.

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Technical Indicators Point to Weakness for TSM Stock

The technical landscape for TSM appears concerning. Stock prices have declined 25% year-to-date and 11% within the past month. TSM shares have fallen below their eight, 20, and 50-day simple moving averages, a classic indication of a bearish trend. The 200-day simple moving average stands at $184.40, significantly above TSM’s current price of $150.69, highlighting persistent weakness in the stock’s performance.

Additional technical metrics show that the Moving Average Convergence Divergence (MACD) reads a negative 9.07, suggesting further downward momentum. The Relative Strength Index (RSI), currently at 37.85, indicates the stock is nearing oversold territory.

Read also: Chip Stocks Surge As Trump Pauses Tariffs For US Allies, Targets China With 125% Duties

Political Pressure Mounts on Chipmakers

In a critical twist, as TSM struggles, President Donald Trump is exerting additional pressure. He has reportedly warned TSM of a potential 100% tax if the company does not produce chips in the United States, as reported by Business Insider. Trump criticized the CHIPS Act, asserting that he can influence the industry without needing to provide financial incentives, simply by threatening tariffs.

TSMC’s $100 Billion Investment: Will It Suffice?

In response to the challenges, TSMC has committed over $100 billion to establish five U.S. factories, supplementing the $65 billion previously announced. However, market reactions remain skeptical. Investors are caught in a dilemma between a bearish technical outlook and potential tax implications from presidential threats.

For those seeking safer investments in the semiconductor sector, diversified ETFs such as the SPDR S&P 500 ETF Trust SPY, iShares Semiconductor ETF SOXX, or VanEck Semiconductor ETF SMH offer diversified exposure, reducing reliance on any single stock facing political headwinds.

With increasing technical difficulties paired with renewed political scrutiny, TSMC’s stock is navigating a challenging environment. Investors may find it prudent to await clearer signals of stability and policy direction before deciding to reenter the market.

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