Asian chipmakers, tech stocks rally as TSMC touts AI demand

Investing.com-- Major Asian chipmaking and technology stocks rose sharply on Friday, tracking better than expected earnings from TSMC and as the chipmaking giant also flagged a positive outlook on AI demand.

Taiwan Semiconductor Manufacturing Corp (TW:2330) (NYSE:TSM) rose over 5% in Taiwan trade to a near two-year high, after it clocked a smaller-than-expected decline in its fourth-quarter earnings.

CEO C.C. Wei said on Thursday TSMC was well-positioned to capitalize on a boom in artificial intelligence development over the coming year, and that it was already seeing improved demand for its most advanced chips.

"We expect 2024 to be a healthy growth year for TSMC, supported by [...] robust AI-related demand. AI models need to be supported by more powerful semiconductor hardware [...] thus the value of TSMC's technology position is increasing," Wei said in a post-earnings call.

His comments triggered buying into several other Asian chipmaking stocks on Friday. South Korea’s Samsung Electronics Co Ltd (KS:005930) and SK Hynix Inc (KS:000660), which manufacture memory chips that are used in AI computing, rose over 3% each.

Japan’s Advantest Corp. (TYO:6857), which makes semiconductor testing equipment, rose over 8%, while chipmaker Tokyo Electron Ltd. (TYO:8035) surged nearly 5%. China’s Semiconductor Manufacturing International Co, or SMIC, added nearly 3% in Hong Kong trade.

U.S. chipmaking majors also rebounded on Thursday after TSMC’s outlook, with NVIDIA Corporation (NASDAQ:NVDA), which is at the heart of an AI-driven boom in chip demand, up nearly 2% in overnight trade. Nvidia has clocked a series of consensus-beating quarterly earnings on support from AI-fueled demand.

TMSC’s outlook pushed up hopes that increased interest in AI development will help offset a nearly two-year slump in the tech industry, which was triggered by high interest rates and decreased appetite for consumer electronics.

Increase in AI was kickstarted by the release of OpenAI's Chat GPT tool in late-2022, which spurred a rush among major tech companies to come up with their own similar offerings. Speculation over the potential applications for generative AI also spurred increased interest in the sector.

Growing uncertainty over U.S. interest rates saw most major tech stocks log a weak start to 2024, as signs of sticky U.S. inflation and labor market strength spurred doubts that the Federal Reserve will begin cutting interest rates early in 2024.

Still, tech is expected to benefit in 2024 from the Fed eventually kicking off a rate-cut cycle, although the timing and the scope of the rate cuts remains unclear.

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