TAIPEI (Taiwan News) — Taiwan's Central Bank stated Thursday that TSMC’s future performance will largely depend on several external factors, including the direction of US policies under US President Donald Trump, geopolitical developments, and the growth of AI technology.

These factors are expected to impact TSMC and broader trends in Taiwan’s stock market. A report to the bank’s board of directors emphasized the crucial role of Taiwan’s tech sector in the financial landscape, per CNA.

TSMC alone accounts for nearly 40% of Taiwan's total market capitalization, positioning it as a significant driver of the tech sector and overall market performance. At the end of last year, the tech sector represented 70% of the country’s market capitalization, with semiconductors making up 47%.

As the world leader in the semiconductor industry, TSMC announced on March 3 that it would increase its investments in the US to mitigate risks from Trump’s policies. This decision caused a downturn in Taiwan’s stock market, as foreign investors reassessed their stock valuations and sold off TSMC shares.

TSMC’s stock movements are particularly influential on the Taiwan Stock Exchange. For every NT$1 (3 cents) change in TSMC’s stock price, the Taiwan Stock Exchange Capitalization Weighted Stock Index, or TAIEX, typically rises or falls by about 8.2 points.

It is widely suggested that TSMC’s increased US investments could raise operational costs, potentially impacting profitability. However, the Central Bank noted that TSMC’s performance will be shaped largely by the evolving global landscape, including geopolitical shifts and technological advances.