It's believed that the name originated from the region of Tarshish, mentioned in the Bible, which was likely a Phoenician trading colony in Spain. Over time, the term "Sepharad" came to be used for the entire Iberian Peninsula, including both Spain and Portugal.
Therefore, Sephardic Jews are those who were originally from Spain and Portugal before their expulsion in 1492. The name reflects their historical and cultural connection to the Iberian Peninsula.