Chipmaking juggernaut Taiwan Semiconductor Manufacturing Co.'s (TSMC) market value temporarily reached $1 trillion on Monday, as the AI craze continued to drive tech stocks.

TSMC manufactures more than half of the world's chips and distributes them to a wide range of companies, including Apple and Nvidia. The business temporarily crossed the threshold after the opening bell in New York, but then fell lower in subsequent trade. Its shares in 2024 have surged by more than 85%. 

The valuation follows that of Nvidia, which manufactures AI hardware and software and temporarily held the world's most valuable position last summer.

The tremendous success of OpenAI's ChatGPT has ignited an AI gold rush, with demand skyrocketing throughout the world for the cutting-edge processors required to train and run AI services.

TSMC leads the worldwide semiconductor business, with the majority of its fabrication operations located in Taiwan. Despite escalating tensions with China, demand for TSMC shares remains strong.

In May, US Commerce Secretary Gina Raimondo emphasized the potentially severe consequences for the United States if China were to decide to reunify with Taiwan.

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Raimondo, showcasing that the US is only interested in Taiwan's "security" because of its importance in the microchip sector, highlighted the critical role of Taiwan in microchip supply and production, stressing the decades-long collaboration between Taipei and Washington in this domain.

Speaking before the US House Appropriations Subcommittee on Commerce, Justice, and Science, Raimondo underscored the significance of Taiwan's contribution to the microchip industry. She pointed out that the United States currently relies heavily on Taiwan Semiconductor Manufacturing Company (TSMC), procuring 92% of its leading-edge chips from the Taiwanese firm.

TSMC, US agree on construction of third semiconductor plant in Arizona

The Taiwan Semiconductor Manufacturing Company (TSMC) announced in April a $6.6 billion plan to launch the construction of a third semiconductor plant in Arizona in collaboration with the US Department of Commerce.

According to the company, the $6.6 billion funding resulted from a Preliminary Memorandum of Terms (PMT) with the US Department of Commerce, intended to contribute to the CHIPS and Science Act.

It further stated that the decision to build a third semiconductor plant is driven by strong customer demand and aims to meet the growing need for advanced semiconductor products in the US.

"TSMC today announced that the U.S. Department of Commerce and TSMC Arizona have signed a non-binding preliminary memorandum of terms (PMT) for up to US$6.6 billion in direct funding under the CHIPS and Science Act. TSMC also announced plans to build a third fab at TSMC Arizona to meet strong customer demand leveraging the most advanced semiconductor process technology in the United States," the statement read.

The statement also indicated that, in addition to the $6.6 billion in direct financing, the memorandum also provides access to up to $5 billion in loans for TSMC.