Markets

TSMC’s AI Bet Triggers Mega Chip Rally, Except in China

 

A forecast by the world’s largest contract chipmaker, TSMC, that demand for high-end artificial intelligence (AI) semiconductors would bump up its revenue by more than 20% in 2024, triggered a blistering chip rally across Asia on Friday.

Semiconductor-related stocks saw a day of up-moves across key Asian markets, including Japan, South Korea, India and Taiwan, on the back of similar overnight gains on Wall Street.

China, however, gave the fireworks a miss as the country’s economic concerns continued to cloud over its beaten-down stock market.

 

Also on AF: China’s Military, AI Bodies Still Buying Nvidia Chips Despite US Ban

 

In Japan, the chip rally single-handedly set the Nikkei share average back on track for a second consecutive weekly advance.

Heavyweight Nikkei stocks Tokyo Electron and Advantest were the biggest points gainers, advancing 5.05% and 7.92% respectively.

Precision machinery — essential for higher yields and lower production costs in the chipmaking process — was the top performer among the Tokyo Stock Exchange’s 33 industry groups, rising 2.62%.

The 1.4% bounce in the Nikkei was only outdone by the more than 2.6% jump in Taiwan, home to TSMC.

TSMC’s shares closed 6.5% higher on Friday in Taipei, cementing its position as Asia’s most valuable listed company, worth about $512 billion.

That was after the chipmaker’s New York-listed shares saw a blockbuster run overnight, surging close to 10% and ending with a market capitalisation of $586.22 billion.

TSMC’s revenue projection also sparked a rally in American chip-related stocks on Thursday.

Heavyweight chipmaker Nvidia and AMD rose 1.9% and 1.6%, respectively and notched record highs.

Barron’s noted that Nvidia, the US’ most valuable chip firm, was on track to hit a market cap of more than $1.4 trillion for the first time ever.

Other US chipmakers, Broadcom, Qualcomm and Marvell Technology gained more than 3% each. The Philadelphia SE semiconductor index saw an overall rally of 3.4%.

“AI has caused this industry to have a ‘rip your face off’ rally, and I don’t think it’s stopping anytime soon,” Jake Dollarhide, CEO of Longbow Asset Management, said.

 

‘Technological revolution’

A major Apple and Nvidia supplier, TSMC doubled down on its bets on an AI chip boom, despite a broader slowdown in the semiconductor industry due to weak smartphone and electric vehicle sales.

“We are a key enabler for AI applications. So far today, everything you saw for AI comes from TSMC,” the chipmaker’s CEO CC Wei said, after the company reported a fourth-quarter net profit that beat market expectations.

He said the current quarter would be impacted by seasonality of the smartphone business, which would be partially offset by strength in its high-performance computing segment that includes AI chips.

“With basic semiconductors – that’s a supply and demand business… but I think you’re going to continue to hear chatter about AI, and it will translate into huge revenue growth for a lot of these companies,” Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York, said.

“To me, we’re in the early stages still of a technological revolution.”

 

  • Reuters, with additional inputs from Vishakha Saxena

 

Also read:

 

TSMC’s Flat Q4 Revenue Not a Cause For Concern: Analysts

 

Slower Nvidia Chip Out in Q2 But China Firms ‘Don’t Want It’

 

TSMC Gets China Chip Waiver From US, Eyeing ‘Permanent’ Permit

 

Intel to Take on Qualcomm, Nvidia in Auto AI Chip Fight

 

UN Chief: Big Tech Chasing AI Profits Ignoring Risks – Guardian

 

Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at vishakha.saxena@asiafinancial.com

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