Intel's market capitalisation fell by about US$40bn after its quarterly call (23 July night) while TSMC rose by almost an equivalent amount.
TSMC shares are up 12% ytd and it now accounts for over 5% of the MSCI EM index on its own. Its performance ytd is in line with the two largest EM stocks, Alibaba and Tencent. TSMC forward consensus PE is about 22x (compared to the recent peak of 26x at the end of 2019).
The broad tech rally posted amid accelerated penetration due to Covid-19, continuing market share gains for TSMC, and, now, Intel's failure, have offset concerns related to slower global growth and increasing tension between the US and China and between China and several of its neighbours (both in terms of the general risk to Taiwan's sovereignty and unobstructed access to sea and air transit, as well as in terms of specific risk to TSMC orders from Huawei).
Inflows related to EM passive funds and ETFs may drive an additional leg up in TSMC in the short-run, but its valuation arguably provides little compensation for those concerned about the trajectory of US-China relations.
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