Shares of Taiwan Semiconductor Manufacturing (TSM -5.75%) were falling today as bearish momentum in the broader semiconductor sector seemed to weigh on the stock. There was also a news item out of Japan that brought up a familiar bogeyman for TSMC.

As of 12:18 p.m. ET, the stock was trading 5.8%, while the Nasdaq Composite had lost 2.3%, indicating a broader pullback in the market.

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Chip stocks are still volatile

Chip stocks like Taiwan Semi tend to go where Nvidia goes and shares of the artificial intelligence (AI) chip leader were tumbling today even though there was no major company-specific news out on the stock.

Instead, investors seemed to be questioning valuations in the sector after Nvidia beat estimates in its second-quarter report last week, but by less than expected.

Taiwan Semi is sensitive to broader demand for semiconductors and AI components so any sense that demand for the new technology is going to live up to the hype is going to weigh on the stock.

Additionally, Japan and China are now clashing over chip export restrictions, and that could be spooking some investors as the military threat from Beijing is seen as one of the biggest long-term risks for TSMC stock.

The U.S. has been pressuring Japan to further restrict exports of advanced chipmaking technology to China, and Beijing is now threatening economic retaliation including withholding rare earth metals and other minerals needed for technology like auto production.

Is TSMC a buy?

While Beijing remains a risk for TSMC, the manufacturing giant seems like one of the safer stocks in the industry as the need for its services won’t go away no matter who wins the AI race.

Recent results have also been strong for the company. Revenue in July jumped 45%, and the company should provide an August update soon.

At this point, TSMC looks like a good candidate for buying on the dip. The business is growing rapidly, the valuation is reasonable, and it has huge competitive advantages.