TSMC Wins AA- Upgrade and Shifts to Dollar Dividends as AI Chip Demand Tightens Its Grip

S&P Global has raised TSMC’s credit rating to AA-, a move that underscores the chipmaker’s formidable cash generation and its central role in the artificial intelligence supply chain. The upgrade comes as the Taiwanese semiconductor giant distributes a record quarterly dividend worth 155.6 billion New Taiwan Dollars (six TWD per share) and simultaneously prepares to pay foreign investors in US dollars from the third quarter — a shift designed to ease pressure on the local currency.

The stock closed Wednesday at €381.00, still 9.39 percent below its 52-week high of €420.50 set on July 1. By Thursday, shares had climbed 1.05 percent to €385.00 as the dividend hit accounts. Year-to-date, the shares have gained 41.03 percent, while the 12-month return stands at 92.42 percent. The annualized 30-day volatility of 56.30 percent and a 14-day RSI of 50.1 suggest the stock is consolidating after its long rally.

Currency move and rating signal financial strength

Foreign investors hold roughly 70 percent of TSMC equity, and the steady outflow of dividend payments in New Taiwan Dollars has contributed to erratic exchange-rate swings. The Taiwan central bank confirmed Thursday that TSMC will switch to USD-denominated dividends for international shareholders, a step the financial regulator recently approved. The S&P upgrade likewise reflects confidence that the company can finance the next wave of chip-fabrication technology without straining its balance sheet — a crucial advantage as it ploughs money into capacity expansion.

CEO C.C. Wei has been candid that demand for AI chips continues to outrun available capacity even as the company’s new plants in Arizona come online. TSMC has secured enough land in Arizona to expand over a full decade and is planning a dedicated chip-packaging facility for 2029 to ease bottlenecks in advanced packaging technologies such as CoWoS.

Should investors sell immediately? Or is it worth buying TSMC?

Pricing power and analyst expectations

The company’s dominant 90 percent share of the advanced AI chip market gives it unusual pricing leverage. TSMC is raising prices by as much as 10 percent for its most advanced nodes, hitting marquee customers like Nvidia and Apple. Revenue for the second quarter is expected to reach as high as $40.2 billion when management reports results later in July.

Analyst sentiment is broadly constructive but not universally ebullient. Goldman Sachs has removed TSMC from its Asia-Pacific Conviction List, though it retains a buy rating; it argues that the strong first-half run already prices in much of the positive news. GF Securities, by contrast, predicts TSMC will lift its 2026 revenue growth forecast above 30 percent at the upcoming analyst meeting in July. Capex plans for 2027 are already circulating at up to $73 billion, earmarked for the N5, N3 and N2 fabrication nodes.

Citi and GF Securities both expect second-quarter margins of around 68 percent, with the potential for an even more aggressive second-half outlook. The tailwind from hyperscaler spending remains powerful: Microsoft, Amazon and Meta continue to boost their AI-related capital expenditure. Production of Meta’s new “Iris” AI chip is scheduled to start in September, adding another demand driver.

A typhoon pause but no let-up in momentum

Trading on the Taiwan Stock Exchange will be suspended Friday as Typhoon Bavi approaches the island. The storm threatens severe disruption, but TSMC’s underlying business shows no signs of slowing. The company’s combination of rating improvement, currency adaptation, pricing power and capacity investments paints a picture of a firm that is not merely riding the AI wave but actively reshaping the financial and operational infrastructure around it.