Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) shares rebounded in premarket trading Monday, recovering from Friday's losses as renewed investor enthusiasm for artificial intelligence outweighed mounting geopolitical concerns between Washington and Beijing.

Taiwan's Ministry of Economic Affairs downplayed fears that China's expanded rare earth export controls could disrupt the island's critical semiconductor industry.

Despite Beijing adding five new rare earth elements to its restricted export list and tightening scrutiny of chip-related exports ahead of the upcoming Trump–Xi talks, Taiwan's chipmakers are expected to remain largely insulated.

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Most of the rare earths used in Taiwan's semiconductor manufacturing are sourced from the United States, the European Union, and Japan, the ministry said.

Home to the world's largest contract chipmaker, Taiwan is expected to see minimal disruption in advanced chip production, particularly for AI and high-performance computing applications.

However, officials cautioned that China's curbs could ripple through broader global supply chains, especially in sectors reliant on rare earth materials such as electric vehicles and drones.

The restrictions have already weighed on Chinese tech leaders including Alibaba (NASDAQ:BABA) and Baidu (NASDAQ:BIDU), while lifting shares of rare earth producers amid expectations of increased U.S. domestic output.

Financially, Taiwan Semiconductor continues to post strong momentum. The company reported consolidated net revenue of 330.98 billion New Taiwan dollars for September 2025, a 31.4% increase from a year earlier but down 1.4% from August.

The gains were fueled by robust global demand for advanced semiconductor nodes, particularly those supporting artificial intelligence and high-performance computing.

Year-to-date, TSMC shares have surged more than 42%, handily outperforming the Nasdaq 100's 15% gain over the same period.

Cumulative revenue for the first nine months of 2025 climbed 36.4% year-over-year to 2.76 trillion New Taiwan dollars.

This growth reflects the company's accelerated ramp-up of 3-nanometer production and ongoing development of its next-generation 2-nanometer technology at facilities in Taiwan and Arizona.

That expansion is underpinned by strong demand from major clients including Apple (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA).

Price Action: TSM stock was trading higher by 5.19% to $295.24 premarket at last check Monday.

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