TSMC jumps nearly 10% adding $34 billion in value as Intel faces next-generation chip delays

KEY POINTS

• Shares of TSMC closed nearly 10% higher at 424.50 Taiwan dollars ($14.48), an all-time high for the stock.
• Intel said last week that it may look for third parties to manufacture its chips containing so-called 7-nanometer transistors.
• TSMC, which is a foundry, could benefit by taking some of that business. 

Signage for Taiwan Semiconductor Manufacturing Co. (TSMC) is displayed at the company's headquarters in Hsinchu, Taiwan, on Wednesday, June 5, 2019.

Ashley Pon | Bloomberg via Getty Images

Taiwan listed-shares of TSMC rallied on Monday after U.S. chipmaker Intel said it faces delays for its next-generation chips and could outsource some of the production.

TSMC closed nearly 10% higher at 424.5 Taiwan dollars ($14.48), an all-time high for the stock. Since Friday's close, TSMC has added 998.32 billion Taiwan dollars ($34.05 billion) in market capitalization.

The Taiwanese chipmaker got a boost after Intel said last week that it was delaying the release of chips containing so-called 7-nanometer transistors. These chips are seen as offering a higher performance than previous generations.

Intel, which is already behind competitors such as AMD, said it had found an issue in the 7-nanometer manufacturing process. The U.S. chip giant's management said during its second-quarter earnings call that it had made "contingency plans" which includes looking at third parties to manufacture these semiconductors.

TSMC is a so-called foundry. That means it makes chips that other companies design. Apple is a customer for example. 

While Intel didn't name potential third parties, analysts see TSMC as being a contender.

"Chip outsourcing to foundries now its (Intel's) contingency plan, which opens up a TAM (total addressable market) of approx. US$20bn to TSMC and puts more fuel to the advanced foundry market already running tight," Szeho Ng, managing director of research at China Renaissance Securities, told CNBC by email.

He added that TSMC "pretty much monopolizes the space," referring to the production of chips with the 7-nanometer process. 

Samsung Electronics, another company that operates a foundry business, could also potentially take some of Intel's business. Its shares were over 2% higher on Monday.