AI spending jitters to rattle TAIEX briefly: NDC head

Investors in global capital markets have expressed unease regarding the cash flow of some cloud service providers. These providers have invested heavily in AI infrastructure but have yet to generate sufficient revenue, triggering a global sell-off in technology stocks. This sentiment sent ripples through markets, including Taiwan's TAIEX, which saw a significant intraday drop, influenced by falls in the NASDAQ Composite and Philadelphia Semiconductor Index.

However, the TAIEX recouped most of its losses, attributed to bargain hunting. Minister Yeh Chun-hsien emphasized that Taiwan's hardware manufacturers continue to secure substantial orders, with backlogs projected to grow through the end of next year amid the ongoing AI boom. He noted that Taiwanese tech companies, largely revenue-driven by overseas markets, show no signs of deteriorating liquidity or cash flows.

Taiwan Semiconductor Manufacturing Co (TSMC) exemplifies this resilience, reporting advanced production capabilities, established computing capacity, and record earnings. The company's net profit in the third quarter rose 68.7 percent from a year earlier to NT$763.06 billion (US$23.33 billion), and its revenue growth forecast for the year was raised to 44 percent in US dollar terms. This suggests that global AI-related stock volatility is unlikely to undermine the fundamental strength of Taiwan's hardware suppliers, implying a temporary rather than structural impact on their operations and market performance.