Asia chipmakers become new centre of AI rally

TAIPEI/SEOUL: Asia’s semiconductor giants are emerging as the new centre of gravity in the global artificial intelligence (AI) boom, as soaring earnings and investor demand fuel record rallies across Taiwan and South Korean markets.
Taiwan Semiconductor Manufacturing Co (TSMC), Samsung Electronics and SK Hynix — now Asia’s three most valuable listed companies — have become major beneficiaries of surging global demand for AI chips and infrastructure.
South Korea’s benchmark KOSPI index has doubled in little more than six months, driven largely by semiconductor gains, while leveraged buying by South Korean retail investors reached a record 25 trillion won in late April, reflecting growing appetite for AI-linked stocks.
Analysts say investors are increasingly favouring Asian chipmakers because they are already generating strong profits from AI demand, unlike several major US technology firms facing heavy spending pressures linked to AI expansion.
Samsung, SK Hynix and TSMC supply chips and hardware to major global technology companies, including Nvidia and members of the “Magnificent Seven” group of US tech firms.
“It’s a seller’s market for AI suppliers,” Alex Huang, chairman of Fubon Financial Holding’s fund arm, said, noting that demand for advanced chip capacity remains exceptionally strong.
Samsung Electronics reported an eightfold rise in first-quarter profit, with semiconductors accounting for 94 per cent of its record 57.2 trillion won in revenue. Its market value has surpassed $1 trillion, making it only the second Asian company after TSMC to cross that threshold.
SK Hynix, meanwhile, has surged from a valuation of less than $100 billion around 16 months ago to nearly $800 billion, supported by strong demand for high-bandwidth memory chips used in AI systems.
The semiconductor boom is also supporting wider economic growth across Asia’s advanced manufacturing economies.
Taiwan’s economy expanded by 13.69 per cent in the first quarter, marking its strongest growth in nearly four decades, while South Korea posted its fastest economic growth in almost six years.
Chris Lo, vice-president at Nomura Asset Management Taiwan, said many Taiwanese companies are already fully booked through 2027 because of strong AI-related demand.
However, some analysts warned that enthusiasm surrounding AI-linked shares could increase market risks.
Nick Ferres, chief investment officer at Vantage Point Asset Management in Singapore, cautioned that parts of the rally were becoming increasingly risky as investors poured money into leveraged semiconductor products.
Still, global investors continue to add exposure to Asian technology markets, with fund managers arguing that investor positioning remains relatively light following earlier outflows from Taiwan and South Korea this year. — Reuters