A man walks past the TSMC logo at the company’s headquarters in Hsinchu, Taiwan. TSMC is the world’s largest semiconductor foundry.

Sam Yeh | AFP | Getty Images

The world’s largest chip maker Taiwan Semiconductor Manufacturing Company (TSMC) has overtaken Chinese tech giant Tencent and has become Asia’s most valuable company.

Beijing’s regulatory crackdown on the country’s tech sector in recent months has lowered valuations of Chinese tech giants Tencent and Alibaba, while chipmakers’ stocks have appreciated amid ongoing global semiconductor shortages.

TSMC, a key supplier to Apple, overtook Tencent in early August. According to data from Refinitiv Eikon on Wednesday morning during Asia Hours, the Taiwanese chipmaker is now at the top of market cap – among Asian companies – at more than $ 538 billion.

Tencent ranked second with a market cap of more than $ 536 billion, while Alibaba took a distant third place with about $ 472 billion.

China’s crackdown is hurting technology companies

Tencent and Alibaba’s market caps were hit again on Tuesday – each losing more than $ 20 billion – after China’s market regulator released draft rules designed to stop unfair online competition.

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In this latest move in the tech sector, China’s state market regulator highlighted the regulator’s efforts to tighten laws related to antitrust and competition law. Other areas that Beijing has come under regulatory oversight include financial technology and the collection and use of data.

Chinese technology stocks plummeted as uncertainty continues to cloud the sector. The Hang Seng Tech Index, which tracks the largest technology companies listed in Hong Kong such as Tencent and Alibaba, has fallen by more than 25% since the start of the year.

Chip manufacturers benefit from semiconductor shortages

Chip maker TSMC, on the other hand, has received a boost as the world faces a global semiconductor shortage caused by supply chain disruptions due to the pandemic, along with a surge in demand from industries like automobiles and data centers.

In response to the shortage, TSMC announced earlier this year that it would invest $ 100 billion over the next three years to increase capacity, according to Reuters.

TSMC’s stock is up more than 6% since the start of the year. Taiwan plays an oversized role in chip manufacturing, dominating the foundry market or outsourcing semiconductor manufacturing. Much of this dominance can be attributed to TSMC, whose customers include Apple, Qualcomm, and Nvidia.

– CNBC’s Arjun Kharpal and Yen Nee Lee contributed to this report.