As news breaks of a possible resolution to the trade war, Taiwan Semiconductor (TSM) is still left in a tenuous position.
Shares of the Hsinchu, Taiwan-based semiconductor company have bounced from pre-market losses to a modest gain on the day, as analysts suggests the bottom might have been hit for the stock. As news broke of a possible trade resolution, shares accelerated gains to break 1%.
With Apple (AAPL) and Huawei as its top customers, indisputably two of the companies most disproportionately affected by trade tensions, it is no surprise the shares reacted as such.
"Order visibility remains very low, as it has likely been affected by the U.S.-China tariff truce and channel inventory digestion," Fubon Financial analyst Sherman Sang said prior to the agreement, awaiting more clarity upon an agreement.
Now that an agreement appears imminent, the company's fortunes could return closer to status quo, and quickly fix the forecast that troubled the stock in morning hours.
Still, as it sits as one of the largest companies on an island that has been in a perpetual game of tug of war between the world's largest powers for decades, the position is less than enviable.
Taiwan, officially called the Republic of China, is under constant pressure from the mainland to "rejoin" the larger nation and solve what Chinese officials have termed the "Taiwan problem."
"We make no promise to renounce the use of force, and reserve the option of taking all necessary measures," President Xi Jinping said in some recent, incendiary comments.
Taiwan has recently called the comments of Chinese academics and politicians "out of control."
"As for China's related out-of-control actions, we need to remind the international community to face this squarely and to unite efforts to reduce and contain these actions," government spokesman Alex Huang told reporters in Taipei on Thursday.
The potential for belligerence in the region reaches beyond simple trade disputes as well.
"As a lot of these technologies mature, as [China's] reorganization of their military comes into effect, as they become more proficient with these capabilities, our concern is they will reach a point where internally, within their decision-making, they will decide that using military force for a regional conflict is something that is more eminent," Foreign Policy quoted a senior U.S. Defense official as saying on Thursday.
Obviously, the "wayward province" of Taiwan would be foremost among those targets, as suggested by the Chinese Navy's continued patrols through the Strait of Taiwan.
So, while the market may be moving on a fortuitous fall of trade tensions, history suggests that any Sino-American pact may not be a panacea for Taiwan.
Those political risks that play into the survival of the nation, of course spell trouble for the country's largest tech stock.
