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What’s going on here?

TSMC announced decent results on Thursday, after the market-leading chipmaker made the most of the AI furor.

What does this mean?

TSMC churns out computer processors for the world’s biggest tech companies like Apple and Nvidia. And with demand for AI systems reaching a fever pitch, TSMC’s revenue was 13% higher last quarter than the same time last year, landing above expectations at just shy of $19 billion. Profit came up with it, rising nearly 9% to hit $7.2 billion. Now, the company doesn’t expect the smartphone and computer market to improve much anytime soon, so it didn’t increase its sales and margin outlooks for the year as a whole. However, TSMC did slightly bump up its revenue guidance for next quarter.

Why should I care?

For markets: The chips are up and down.

Chips from TSMC end up in a whole range of gizmos and gadgets. But when a tough economy keeps customers from buying nice-to-haves, that affects businesses all the way down the supply chain. Right now, that’s showing up in TSMC’s auto business: the company now expects sales in the division to fall after previously predicting a pick-up, likely due to stuttering electric vehicle sales. Apple’s underwhelming iPhone sales won’t help either, not least because the company made up around a quarter of TSMC’s revenue last year. Those concerns might explain why the share price is down in the US: AI-related companies need to tick every box to move their stocks even higher.

The bigger picture: Time to explore the world.

Most of TSMC’s chip-building plants are in Taiwan. And while the high-tech equipment survived the earthquake earlier this year, the country’s increasingly tense relationship with China has world leaders worried. The US, Europe, and Japan have taken the opportunity to shoot their shots, dangling incentives designed to tempt TSMC into their regions. That seems to be working: the chipmaker is building plants in Japan, Germany, and the US.

What’s going on here?

Finance chiefs from the US, Japan, and South Korea are forming a group chat to discuss the threats from a rising US dollar.

What does this mean?

The US dollar’s been strengthening all year – and that’s great news for American tourists abroad, but it’s making for awkward conversations among trading partners. As the greenback strengthens, other currencies weaken, after all. And a severe slump can stress economies like Japan and South Korea: it shrinks their buying power, drives up inflation, and hurts confidence. It’s no wonder these finance ministers are raising their voices. And if their words to support their currencies aren’t enough, they may soon follow suit with actions.

Why should I care?

For markets: The not-so-sweet dollar milkshake.

The dollar milkshake theory explains what happens when there just aren’t enough US dollars to meet a rising demand. As the currency strengthens, countries that carry USD-denominated debt see their repayment costs rise, increasing the risk they’ll miss a payment. The resulting defaults, in turn, boost the dollar’s demand even more, because of its status as a safe haven in times of uncertainty. In worst-case scenarios, the milkshake froths up a global debt crisis, sending other currencies sliding and icing over a lot of portfolios. Luckily, we’re not there yet, and with emerging market economies in relatively fair health, we might not get there.

The bigger picture: They don’t call it “almighty” for nothing.

That group chat might be limited to just the US, Japan, and South Korea, but everyone’s got a stake in the conversation. The US dollar impacts economic activity everywhere and effectively holds the world’s financial system together. As the world’s primary reserve currency, it’s the financial buffer countries use to handle shocks. And because all the major commodities, like oil, are priced in dollars, changes in the currency’s value have far-reaching effects, influencing the cost of goods and services worldwide.