What happened

Stocks did well today, but tech stocks did even better, and semiconductor stocks did even better than that. Yet Taiwan Semiconductor Manufacturing's (TSM -3.45%) stock was a particular standout. Shares of the leading semiconductor foundry were surging today, up 6.5% as of 2:56 p.m. ET.

The company, also known as TSMC, actually had muted performance to start the week amid news that Warren Buffett's Berkshire Hathaway had completely sold out of the stock last quarter, as reported in a filing Monday night. So perhaps TSMC is playing catch-up to the surging semiconductor sector today.

While there wasn't one particular reason for today's big rally, there were several factors likely propelling the sector and TSMC (specifically) higher today.

So what

The semiconductor sector is cyclical, with violent booms and busts. However, the sector is really a "growth cyclical" market, as semiconductors continue to make their way into more and more applications over time. Therefore, macroeconomic events have the ability to propel chip stocks higher or lower than the overall market.

Today, traders appeared to bet that debt-ceiling talks would bear fruit by the end of this week, which many think is the cutoff to get the debt ceiling passed through both houses of Congress before the U.S. violates the debt ceiling. Yesterday, House Majority Leader Kevin McCarthy, who had previously been quite downbeat on the state of the talks, noted the negotiators had found a process and structure to get to a deal by the end of the week.

It's no surprise that stocks largely took off on the news, as traders hoped a potential debt-ceiling recession would be avoided. Semiconductors would especially suffer in a recession triggered by a default, so it's no surprise those stocks are bouncing higher.

The positive macro news combined with company-specific news that TSMC Chairman Mark Liu would meet with Japanese Prime Minister Fumio Kishida and a handful of other leading semiconductor executives. The meeting is somewhat of a rare occurrence for the Japanese leader but suggests Japan may be willing to incentivize or subsidize more production on its own shores, which could benefit TSMC. Of note, TSMC is already in the middle of constructing a large fab in Japan, which will produce specialty technologies on the 12nm, 16nm, and 28nm processes.

Last week, TSMC also unveiled its new low-cost chiplet solution for integrated systems on chips. Given the excitement about artificial intelligence, integrated GPU-CPU systems combined with high-bandwidth memory should be an important growth segment of the semiconductor industry for quarters and years to come. So there may be some lingering excitement over that, as well.

Now what

Even though Warren Buffet sold TSMC stock in the first quarter, he still has lots of admiration for the company. At the recent Berkshire Hathaway annual meeting, he said: "There's no one in the chip industry that's in their league, at least in my view... Marvelous people and marvelous competitive position and everything, [but] I'd rather find it in the United States."

Assuming you're comfortable with TSMC's location in Taiwan and its ongoing geographic diversification efforts into Japan, the U.S., and the E.U., it remains a high-quality stock with an advantage in all-important leading-edge chip manufacturing. Meanwhile, the stock is still more than 40% off its all-time high and trades for a very reasonable price-to-earnings ratio of just 14.6.