TSM stock rallies as Nvidia reportedly turns to TSMC for advanced memory chips - can it challenge Samsung, Micron and SK Hynix?

TSM stock today: Taiwan Semiconductor Manufacturing Company (TSMC) stock jumped on Friday after a report said that the Taiwanese chipmaker is considering manufacturing advanced memory chips at Nvidia's request, potentially opening a new business opportunity as demand for AI hardware continues to grow.

Why Is TSM Stock Up Today

TSMC's American depositary receipts (ADRs) rose more than 6% in early trading. As investors reacting to the possibility that TSMC could expand beyond its core chipmaking business and enter a market dominated by Samsung Electronics, SK Hynix and Micron Technology.

TSMC Considers Making 3D DRAM Chips for Nvidia

According to The Information report, TSMC has started drawing up plans to manufacture 3D dynamic random-access memory (DRAM). The proposal is reportedly linked to a request from Nvidia, which is TSMC's biggest customer.

The company is considering building new factories for memory production or acquiring an existing semiconductor facility and converting it for that purpose.

The reported effort is being led by Hsu Kuo-chin, a TSMC vice president responsible for advanced packaging operations who previously managed Micron's regional business.

AI Memory Shortage Puts TSMC in the Spotlight

The potential move comes as growing demand for AI hardware puts pressure on memory chip supplies. Nvidia and Apple are among the major technology companies seeking additional sources of memory.

3D DRAM uses vertically stacked memory cells rather than arranging them in a single horizontal layer. The design aims to increase memory capacity and represents a potential new direction for the industry.

TSMC's reported plans also come as Micron expands its own manufacturing capacity. In March, Micron agreed to acquire a Taiwan-based facility from Powerchip Semiconductor Manufacturing for $1.8 billion, with plans to convert it for advanced memory production.

TSM Stock Could Enter Competition With Samsung, SK Hynix and Micron

Moving into advanced memory would put TSMC in direct competition with Samsung Electronics, SK Hynix and Micron, which already have established positions in the market.

TSMC has patents related to vertical DRAM technology, but moving from development to large-scale production could take years, The Information reported. The memory market also faces cycles of shortages and oversupply, which can affect chip prices and manufacturers' margins.

TSMC already has a working relationship with SK Hynix. In April 2024, the two companies signed a memorandum of understanding to collaborate on HBM4 development, with SK Hynix planning to use TSMC's advanced logic process to manufacture the memory chip's base die, according to SK Hynix.