TSMC to Tighten AI Chip Export Controls, Talks with Elon Musk on Terafab

Key Takeaways

• <li>TSMC plans tighter AI chip export curbs on China, aligning with U.S. restrictions on advanced semiconductors and AI servers</li>
• <li>TSMC is in talks with Elon Musk over the Terafab project but has reached no agreement</li>
• <li>Morningstar estimates TSMC trades 27% below fair value with potential capacity tripling via Terafab</li>
• <li>TSMC's capital expenditure could reach $98 billion in 2028, up 53% from 2026 estimates</li>
• <li>TSMC's Q4 revenue guidance exceeded forecasts by $7 billion on strong 2-nanometer demand</li>
• <li>TSMC reported Q3 net profit of NT$763.1 billion, up 69% year over year, with $265 billion committed to U.S. investment</li>
• <li>AI stocks fell sharply with SOXX down 12.6% from its October peak, its longest losing streak since 2015</li>
• <li>CoreWeave shares fell 54%, widening the valuation gap between OpenAI and Anthropic</li>
• <li>Anthropic's valuation rose to over $2 trillion while OpenAI briefly fell below $1.5 trillion</li>
• <li>Character.AI's bankruptcy reveals financial stress in the AI industry, with experts warning 80% of new cloud companies could fail by 2030</li>

Taiwan mulls tighter AI chip export curbs on China amid TSMC Terafab talks

Taiwan plans to tighten export rules on advanced AI chips and servers sold to China, aligning with U.S. restrictions. Economic Affairs Minister Kung Ming-hsin said the government will add AI servers and advanced semiconductors to its controlled items list. TSMC is investing $265 billion in U.S. chip manufacturing and discussing a potential role in Elon Musk's Terafab project. TSMC CEO C.C. Wei confirmed talks with Musk but said no agreement has been reached. TSMC reported a 51% jump in Q3 revenue and expects 61% quarterly sales growth.

Morningstar says TSMC undervalued as Terafab could triple its capacity

Morningstar estimates TSMC trades 27% below fair value with a $534 price target. The firm said matching Tesla's Terafab project could triple TSMC's effective manufacturing capacity. TSMC's capital expenditure could reach $98 billion in 2028, up 53% from its 2026 estimate. TSMC's fourth-quarter revenue guidance came in $7 billion above previous forecasts due to faster 2-nanometer production. Barclays analyst Simon Coles raised the price target to $670, implying nearly 60% upside.

Morningstar sees more AI chip investment from TSMC despite stock drop

TSM shares fell 0.6% in pre-market trade and are on track for their biggest weekly loss since July. Morningstar analyst Phelix Lee said TSMC's pledge to leave no food on the table signals potential increased investment. TSMC confirmed discussions with Tesla about the Terafab chipmaking project, which would require TSMC to operate the facilities. The potential Texas expansion would add to the $265 billion TSMC has committed to U.S. investment. TSMC's fourth-quarter revenue guidance exceeded forecasts by $7 billion on strong 2-nanometer and advanced packaging demand.

AI chip stocks flash warning signal not seen since 2015

The iShares Semiconductor ETF SOXX closed at $514.71, down 12.6% from its Oct. 2 close of $588.90, marking eight consecutive losing sessions, its longest streak since September 2015. Nvidia and other chipmakers were hit as investors question whether AI spending can be sustained. CoreWeave shares fell over 15% while its 2031 bond yields moved above 16%, showing how expensive funding has become. Despite the drop, SOXX remains up roughly 70.9% year to date. Investors are now focusing on cash flow, debt costs, and returns on infrastructure spending.

TSMC earnings beat expectations but AI stocks keep falling

TSMC reported third quarter net profit of NT$763.1 billion, up 69% from a year earlier, and revenue of roughly NT$1.49 trillion, both above market expectations. The results confirm strong demand for advanced AI chips, marking the sixth consecutive quarter of record earnings. Yet AI stocks continued to fall because investors now question how expensive it is to finance AI infrastructure. The US 10-year Treasury yield around 5.25% raises borrowing costs for companies like CoreWeave, which carries roughly $50 billion in debt. TSMC benefits directly from chip orders while its customers bear more of the infrastructure risk.

Character.AI bankruptcy reveals AI industry money troubles

Character.AI went bankrupt despite being a popular startup that let users create virtual friends. The company shows a big problem in the AI business: more users means higher costs to run AI models. Companies like Anthropic and OpenAI also face money challenges. Experts worry that 80 percent of new cloud companies could fail by 2030.

Fujitsu faces AI security risk BadEngram amid valuation concerns

Pillar Security and Fujitsu revealed BadEngram, a new attack targeting AI memory systems. This raises worries about safety for open-weight AI platforms. Fujitsu stock has risen recently, with a 30-day gain of 8.62 percent and a 90-day gain of 29.93 percent. The company completed a 32.8 billion yen buyback in late September.

Charles Schwab CEO says AI trading increases client cash

Rick Wurster, CEO of Charles Schwab, said clients using AI for trading are holding more cash instead of less. The number of clients using AI trading tools doubled in about six months. Wurster said the company will not create its own trading algorithms because it sees that as a fool's errand. Schwab plans to connect clients to external AI models.

Circana uses AI to help sales reps win retailer meetings

Circana launched Liquid AI, a tool that helps sales representatives use verified retail data in meetings. The system uses point-of-sale data and AI to create charts and stories for sellers. This approach, called insight-led selling, helps every rep lead conversations instead of just answering questions. The Emiri agent lets sellers ask questions about complex data in plain language.

Catholic Diocese in Mali plans responsible AI charter

The Catholic Diocese of Ségou in Mali will create a charter for responsible AI use. The 2026-2027 pastoral session opened October 15 with discussions on AI and human dignity. Bishop Yaya Dieudonné led the session themed around Christian family and synodality. The gathering aims to help church leaders understand AI risks, protect personal data, and fight disinformation.

New ICPSL framework speeds up multi-objective optimization

Researchers introduced ICPSL, a framework for preference-conditioned Pareto set learning. It works with limited offline data and avoids repeated searches across preferences. The system pretrains a hypernetwork on synthetic data, then generates a problem-specific model in one forward pass. Experiments show it produces high-quality solutions with faster construction times.

Democratic presidential hopefuls focus on AI job losses

Potential Democratic candidates for 2028 are highlighting concerns about artificial intelligence destroying jobs. Pete Buttigieg has been vocal about this issue. He worries AI will harm communities the way factory automation hurt Indiana in past decades. The issue is gaining attention among Democrats eyeing the presidency.

CoreWeave sell-off widens OpenAI and Anthropic valuation gap

A sell-off in CoreWeave stock caused a widening gap between OpenAI and Anthropic valuations. OpenAI's valuation dropped over 4% in 24 hours, briefly falling below $1.5 trillion. Anthropic's valuation rose 2.4%, reaching just over $2 trillion. CoreWeave shares fell 54% over the period due to debt concerns. CoreWeave has deals with both companies, including a $22 billion deal with OpenAI.

Sources

• Amid TSMC-Terafab Talks, Taiwan Said To Be Mulling Greater Curbs On AI Chip Sales To China
• TSMC’s ‘Leave No Food On The Table’ Pledge Signals More AI Chip Investment, Morningstar Says
• TSMC’s ‘Leave No Food On The Table’ Pledge Signals More AI Chip Investment, Morningstar Says
• AI Chip Stocks Flash Signal Not Seen Since 2015
• TSMC earnings beat expectations, but why are AI stocks still falling?
• The Week AI Blinked?
• Fujitsu (TSE:6702) Faces An AI Security Test On BadEngram As Valuation Questions Linger
• AI Was Expected to Drain Charles Schwab’s Cash — CEO Rick Wurster Says Traders Are Doing the Opposite: ‘The…
• Insight-led Selling: How AI Helps CPG Sales Reps Win Retailer Meetings
• Catholic Diocese in Mali Plans Charter for Responsible Use of Artificial Intelligence
• In-Context Preference-Conditioned Pareto Set Learning from Limited Offline Data
• Democrats eyeing the presidency can’t stop talking about this issue
• Here's how the CoreWeave sell-off is affecting OpenAI vs. Anthropic valuations