TSMC, Samsung lead Asian chip stocks higher as rate concerns fade

Shares in Asia's largest chipmakers TSMC and Samsung Electronics climbed as slowing U.S. inflation data sparked bets that the Federal Reserve's rate hikes will slow, according to Bloomberg.

TSMC surged 8.5%, its biggest gain since July 2020, while Samsung rose 4.6%. The Bloomberg Asia-Pacific Semiconductor Index rose 7.6%, its biggest gain since March 2020, following an overnight gain of 10% in the U.S. industry benchmark Philadelphia Semiconductor Index.

Friday's gains extended the sector's rally this month, but the Bloomberg Asia Chip Index is still down 37% through 2022. Semiconductor stocks and the broader tech sector have been battered this year on concerns over interest rate hikes, a global recession and valuations.

Diana Wu, a senior manager at Capital Securities, said the rally may not last as investors may seek to take profits after the rally. “As for the longer term, I think the global economy will slow as inflation remains high and will hurt growth. Also, the U.S.-China trade war has increased manufacturing costs and reduced supply chain premiums.”

TSMC's report on Thursday also boosted its October sales up 56% from a year earlier, a sign that the world's largest contract chipmaker is continuing to weather a slowdown in electronics demand. Still, even the bad news seemed insignificant as chip tool maker Tokyo Electronics Co Ltd jumped nearly 10% after cutting its full-year outlook.

Amir Anvarzadeh of Asymmetric Advisors said the rise in Tokyo Electron's share price after its results "says it all". "The bottom-up approach should now be shelved, and factors and momentum will be key for the rest of the year."