Was the Taiwan Stock Market Crash Caused by TSMC? Analyst Yun Mu-Hua Decodes the Earnings Call Subtext: This Company Is Highly Ethical

On the 17th, Taiwan's stock market plunged nearly 3,000 points, breaking below the 43,000 threshold and setting a record for the largest closing drop in history. Financial expert Yun Mu-Hua, appearing on the program 'Finance Road to Prosperity,' pointed out that TSMC's Q2 gross margin did not meet external expectations of 69% or 69.5%, which may have disappointed the market. However, he emphasized that this was not due to inability, but rather TSMC's disciplined policy against unjustified price hikes.

Yun stated that while many blame TSMC for the market downturn, the company is actually innocent. The drop was indeed triggered by TSMC's earnings call, as evidenced by the sharp decline in Taiwan stock index futures, TSMC's ADRs, and the subsequent fall in the Philadelphia Semiconductor Index.

He argued that the real cause was excessive market optimism built on years of consistent gains. Investors had grown accustomed to buying on dips, expecting perpetual highs, leading to overconfidence that eventually triggered a correction.

Yun insisted that blaming TSMC is completely misguided. In fact, the earnings call revealed TSMC to be a highly ethical and admirable company. He highlighted Chairman Mark Liu's remark: 'Why should I envy my competitors' gross margins?'—a statement with deep implications.

Yun explained that Liu was subtly referring to memory chip makers like Samsung, which often achieve gross margins above 80%. By saying he 'envies' or even 'jealous' of them, Liu implied that TSMC could also raise prices to boost margins but chooses not to.

TSMC's Q2 gross margin reached 67.7%, slightly above its own guidance but below market forecasts. The projected 3–4 percentage point drop in Q3 further disappointed investors.

Yet, Yun stressed that TSMC is fully capable of achieving a 69.5% margin. The reason it didn't is a deliberate choice—TSMC refuses to engage in unreasonable price increases. This restraint reflects its commitment to long-term, win-win partnerships with customers.

While memory manufacturers may raise prices after years of being pressured, TSMC maintains pricing discipline. Yun emphasized that TSMC does raise prices when justified, but never recklessly. This ethical stance, he concluded, is what makes TSMC truly exceptional.