Shares of Taiwan Semiconductor Manufacturing Company surged to a fresh record high on Friday after Taiwan’s market regulator loosened restrictions on how much domestic funds can invest in a single stock.
The move could unlock billions in fresh demand for the world’s largest contract chipmaker.
The stock rose about 5% as investors reacted to the policy shift, which allows certain funds to significantly increase exposure to heavyweight companies amid the rapid expansion of Taiwan’s technology sector.
TSMC only company that meets new eligibility threshold
Under the revised framework, domestic equity funds and actively managed ETFs focused on Taiwanese stocks can now allocate up to 25% of their assets to a single company, provided that the firm has a weighting of more than 10% on the Taiwan Stock Exchange.
The move marks a substantial shift from the previous 10% cap on single-stock exposure, a rule that had long constrained fund managers’ ability to fully participate in the rise of dominant tech firms.
Taiwan’s regulator said the change was intended to “boost flexibility” for funds in response to the growing size and influence of leading technology companies, particularly as market concentration increases.
At present, TSMC is the only company that meets the new eligibility threshold, underscoring its outsized role in the market.
Massive inflow potential boosts sentiment
With a market capitalization of 54.08 trillion New Taiwan dollars, or about $1.71 trillion, TSMC accounts for more than 40% of the local market’s total value.
Analysts say the rule change could drive a wave of institutional inflows.
“The capital impact is substantial. Combined assets under management for the affected funds stood at nearly CNY 1.28 trillion as of March 31,” AInvest said in a report.
It added that “roughly CNY 192 billion in new capacity could flow into TSMC under the new rules,” equivalent to around $28 billion in fresh demand.
Calling the move the “third wave of FSC liberalization in the past year,” the report noted that regulators framed it as a flexibility measure, but the impact is more immediate.
It described the shift as “a demand shock from forced reallocation, not discretionary buying.”
“The market has started to price this in—TSMC shares are at record highs—but the full flow impact hasn’t materialized yet,” the report said, adding that “the window for positioning ahead of institutional rebalancing is closing fast.”
AI boom and earnings strength underpin rally
The policy shift comes at a time when TSMC is already benefiting from a surge in global chip demand driven by artificial intelligence.
The company manufactures advanced semiconductors for major clients, including Nvidia and Apple.
TSMC last week reported a 58% jump in first-quarter profit, with net income reaching 572.48 billion New Taiwan dollars for the three months ended March.
The results marked a fourth consecutive quarter of record earnings.
The company’s US-listed shares have climbed more than 130% over the past year, recently touching an all-time high of $387.44 before easing slightly.
AInvest said the stock may have further room to run despite its elevated valuation.
“The setup is clear: the stock is fully valued for the news, but not for the sustained buying pressure that follows,” it said, adding that “the 52-week ceiling of $390.20 isn’t a wall—it’s a starting point.”
Broader sector gains and expansion plans
The rally extended beyond TSMC, with other semiconductor names also advancing.
MediaTek rose 8.1%, while Unimicron Technology gained 7.7%, reflecting broader optimism around Taiwan’s chip sector.
TSMC is also expanding its global footprint.
According to a Reuters report, the company plans to open a chip packaging facility in Arizona by 2029, further strengthening its position in the global semiconductor supply chain.
With regulatory tailwinds, strong earnings momentum, and sustained AI-driven demand, TSMC remains at the centre of investor attention as one of the most influential players in the global technology ecosystem.
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