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Taiwan’s TSMC (TW:2330) jumped over 3%, while South Korea’s Samsung Electronics Co Ltd (KS:005930) and SK Hynix Inc (KS:000660) rose 1.6% and 3.7%, respectively, after the Wall Street Journal reported that the three firms will be allowed to maintain and upgrade their chipmaking infrastructure in China.
The three, which are among the biggest chipmakers in the world, had initially gotten a one-year waiver to keep their Chinese infrastructure after the U.S. introduced export controls designed to limit Beijing’s access to the latest chip equipment.
But the WSJ report said that this waiver had been indefinitely extended. All three firms have chip fabrication centers in the country, and rely on it heavily as a market and as a supply chain hub.
The news of the extended waiver quells some concerns over widespread disruption in the chipmaking industry due to the U.S. export controls, which were introduced in late-2022. China had criticized the move, and had also retaliated by banning local sales of U.S. chipmaker Micron (NASDAQ:MU) earlier this year.
Other chipmaking stocks also advanced on Tuesday, with Japanese semiconductor testing equipment maker Advantest Corp (TYO:6857) adding over 5%.
Chipmaking stocks saw a sharp rally in recent weeks, as consensus-beating results from Nvidia (NASDAQ:NVDA) spurred widespread bets that an explosion in artificial intelligence development will fuel more chip demand this year.
A positive forecast from Nvidia largely offset signals on weakening chip demand from major Asian suppliers, who warned that worsening economic conditions in 2023 will dent technology investment.
But AI could offset this trend, particularly with the rising popularity of generative AI tools such as OpenAI’s ChatGPT. AI programs require heavy amounts of computing power to maintain, and in turn fuel chip demand.
