AI frenzy boosts shares of Asia tech hardware exporters amid optimism over chip sales

Investors looking at chip giants like SK Hynix and TSMC are undeterred by expectations for a US recession and worsening Sino-American relations

Stocks linked to semiconductors have done well amid a surge of interest in AI following the launch of ChatGPT last year

Reading Time:2 minutes

Silicon wafer semiconductors on display at a science park in Hsinchu county, Taiwan, on September 16, 2022. Photo: EPA-EFE

Published: 10:32am, 25 May 2023

Investors are snapping up shares of Asia’s technology hardware exporters, bolstered by interest in artificial intelligence and signs that the chip industry is turning a corner.

Rising expectations for an economic slowdown in the US and deepening Sino-American tensions over tech supremacy have done little to dent their rally. A Goldman Sachs basket of Asian exporters to the US – dominated by hardware stocks including SK Hynix and Taiwan Semiconductor Manufacturing Co – has surged more than 11 per cent this year, compared with a 3.1 per cent rise in the MSCI Asia-Pacific Index and a 7.2 per cent advance in the S&P 500 Index.

Investors are “going after technology hardware manufacturers and more specifically, the ones linked to microprocessors, which makes sense considering the surge of AI”, said Tareck Horchani, head of prime brokerage dealing at Maybank Securities in Singapore.

Interest in AI has risen exponentially since the launch of ChatGPT late last year, prompting technology companies to rush out competing tools and the chips to power them. AI has also become a crucial factor in determining companies’ share-price performance.

In China, the frenzy ushered in a months-long rally in software developers, chip makers and even healthcare providers, before market players started to question whether the earnings potential justify their rich valuations.

Conviction is also growing that the electronics cycle has bottomed out, with global semiconductor sales rising in March for the first time in 10 months.

Expectations of a turnaround in chip demand have helped benchmarks in Taiwan and South Korea, which are heavily-tilted to technology shares, to be among the best-performing gauges in Asia this year. The Taiex Index has been trading in bull market territory since January, while the Kospi Index is nearing that milestone.

Select Voice

Choose your listening speed

Get through articles 2x faster

1.25x

250 WPM

Slow

Average

Fast

00:0000:00

1.25x