Nvidia Just Made Samsung Use TSMC. The Stock Is Down 15% Anyway.

Over the weekend, reports said Samsung will build part of Nvidia's next AI memory chip on TSMC's production lines, a first for a company that runs its own chip factories. It extends TSMC's reach into the memory market, days after its CEO said demand is "far above" what it can supply. The stock is 15% below its October high regardless.

HeyTheo Research · Monday, October 19, 2026

Quick Read

• Nvidia (NVDA) has asked all three memory makers, Samsung, SK Hynix and Micron (MU), to build the base of its new custom memory chip on TSMC (TSM)'s 3nm process. Samsung agreed on Sunday, a first.

• That gives TSMC a piece of every stack of Nvidia's next AI memory, not just the processor it sits beside.

• On last week's call, TSMC said demand is "still far above our capability today to supply" and that capacity for its newest 2nm chips will more than double in 2027.

• The stock closed Friday at $412.61, down about 15% from its high, as chip stocks fell eight sessions in a row, their longest losing streak since 2008.

What changed over the weekend

AI chips need a special kind of memory called HBM: memory chips stacked on top of each other, sitting right next to the processor. At the bottom of each stack is a "base die," a small logic chip that controls the stack.

In August, Nvidia introduced its own version, called NVHBM, which moves part of Nvidia's memory controller into that base die. To make every supplier's version behave the same way, Nvidia asked all three memory makers to build the base die on one process: TSMC's 3nm.

Source: Seoul Economic Daily, Reuters, company statements

Samsung is the telling one. It is the only memory maker that also runs a contract chip factory, and it has always made both layers of its memory stacks itself. For Nvidia's custom memory, it now hands the base die to its biggest foundry rival. It keeps its own process for standard memory and for other customers, including AMD (AMD).

Why this matters for TSMC

Until now, TSMC made the AI processor and packaged it with memory that others made. With NVHBM, it also makes a layer inside every memory stack, whichever company sells the memory.

It does not decide who wins the memory race between Samsung, SK Hynix and Micron. It gets paid regardless.

One more detail stands out. Samsung is reportedly checking whether its own foundry could make the base die as backup, in case demand outruns TSMC's capacity. A rival planning for TSMC to sell out says a lot about how tight that capacity is.

Research cue · try it in HeyTheo

Ask Theo for the bull case, bear case and what to watch on Micron, and add: "how does moving the base die to TSMC change Micron's costs and margins?" Micron has said it expects higher profitability from outsourcing that layer. Open HeyTheo

Start with: search MU, then ask the question above.

What TSMC said that headlines skipped

Last week's earnings coverage focused on the beat and the stock's drop. Several lines from the call got less attention, and they fit with the weekend news.

Demand. CEO C.C. Wei: "the demand actually is still far above our capability today to supply." On TSMC's target of AI chip revenue growing in the mid to high 50s percent a year through 2029: "It probably will be higher… We did not see any sign of slowdown."

Capacity. Annual capacity for its newest 2nm chips is expected to more than double in 2027. Its second Arizona factory will start volume production in the third quarter of 2027, slightly ahead of schedule.

Costs. The finance chief said, "The tool price inflation is real." Spending over 2026 to 2028 will be "even more significantly higher" than the previous three years. Brokers now see TSMC's yearly spending reaching about $105 billion by 2028.

Pricing. TSMC prices chips made in the US differently from chips made in Taiwan. That is how it passes the higher cost of overseas factories on to customers.

Research cue · try it in HeyTheo

Build a basket of the companies TSMC buys from, such as chip equipment makers like ASML (ASML), and track it against TSMC itself. "Tool inflation is real" means TSMC's rising costs are their rising revenue. If the basket holds up while TSMC falls, the market is reading the spending plan, not a slowdown. Open HeyTheo

Start with: search TSM, then add ASML and an equipment maker you follow.

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So why is the stock down 15%?

TSMC beat estimates on Oct 15 and guided fourth-quarter revenue to $52.3 billion to $54.3 billion. It still fell 1.8% that day and another 2.3% on Friday.

The selling came from outside the company. Chip stocks fell for eight straight sessions, their longest losing streak since October 2008, and the Nasdaq had its worst week since June. CoreWeave lost about 25% for the week as the cost of insuring its debt climbed. As we laid out in our note on the AI trade's two ledgers, the stress sits with the companies that borrow to buy AI capacity, not with the companies that make the chips.

There is a fair worry inside the company too. The finance chief said overseas factories will cut gross margin by 3 to 4 points over the next few years, and the newest chips cost more to make at first.

What the chart shows

Source: Gotrade, Motley Fool, Vantage Markets, TradingKey; data as of the Oct 16 close

These are levels the stock has already set, not forecasts. Friday's close sits just above the $407 low that buyers defended on heavy volume on earnings day. Holding there would say that support still stands. A close below it would point to the $401 area. A move back through $428 would show buyers returning.

The bull and bear case

The bull case. TSMC now has a role in every major AI memory stack as well as the processors. Its CEO says demand is above what it can supply and growth may beat its own targets. Capacity for its newest chips doubles next year, and it can raise prices where it costs more to build. The stock is 15% off its high because of other companies' debt.

The bear case. Becoming the only supplier for more of the AI build-out means spending more, and "tool inflation is real." Overseas factories will cut 3 to 4 points of margin. If AI buyers struggle to fund new capacity, TSMC's orders follow, and the stock is priced for growth that keeps coming.

Research cue · try it in HeyTheo

Set two triggers on TSMC: "tell me if it closes below $407" and "tell me if it closes above $428." Then use the backtester to see how the stock traded after past losing streaks in chip stocks of six days or more. It frames whether this pullback looks unusual. Open HeyTheo

Start with: search TSM, then set both price triggers.

Research it yourself: rules HeyTheo tracks

• Supplier-customer basket. TSMC tracked against the equipment makers it buys from and the chip designers it sells to.

• Level triggers. Price alerts at levels a stock has already set, such as an earnings-day low or a gap-down level.

• Losing-streak trigger. Flags when a sector index falls six sessions or more in a row.

• Ask Theo. Try: "Which of my holdings depend on TSMC's capacity?" or "Give me the bull and bear case on Micron now that its base die moves to TSMC."

Check the rule behind any trigger before acting on it. You trade through your own broker; HeyTheo helps you decide.

The Tollbooth

The weekend news did not change TSMC's earnings. It changed its position. Nvidia's processors already run through TSMC. Now the memory beside them will too, whichever of the three makers sells it.

The market is pricing TSMC on the sector's worst week since 2008 and its customers' debts. The things worth tracking are narrower: whether Micron and SK Hynix confirm the shift, whether 2nm capacity doubles on schedule, and whether the stock holds the $407 floor its buyers set on earnings day.

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Sources

Seoul Economic Daily, Reuters, TSMC, Motley Fool, TrendForce, Crypto Briefing, Tom's Hardware, FinanceFeeds, Gotrade, Vantage Markets, TradingKey

Disclaimer

Disclaimer: HeyTheo is a research and education platform, not an investment adviser or broker-dealer. Nothing here is advice to buy, sell, or hold any security. You trade through your own broker; HeyTheo helps you decide. Backtested results are hypothetical and do not guarantee future returns. References to governments, officials, or policies are for market context only and are not political endorsements. All investing involves risk, including loss of principal. Data is as of the dates noted.