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Asian chipmaking stocks advance ahead of TSMC Q1 earnings

Published 2024-04-17, 11:20 p/m
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Investing.com-- Major Asian chipmaking stocks advanced on Thursday, shrugging off weak cues from their U.S. peers as investors looked to earnings from TSMC to gauge whether artificial intelligence demand remained strong. 

U.S. chipmaking stocks such as NVIDIA Corporation (NASDAQ:NVDA) and Advanced Micro Devices Inc (NASDAQ:AMD) tumbled on Wednesday after weaker-than-expected earnings from Dutch semiconductor manufacturing technology maker ASML Holding NV (AS:ASML). The report spurred some concerns that demand may not be as strong as initially expected. 

But memory chip makers took positive cues from a report that Micron Technology Inc (NASDAQ:MU) was set to receive over $6 billion in U.S. government grants to increase domestic production. The stock recovered in aftermarket trade on Wednesday. 

South Korean memory chip makers Samsung Electronics Co Ltd (KS:005930) and SK Hynix Inc (KS:000660) rose 1% and 0.8%, respectively. Samsung had earlier this week received similarly valued U.S. grants to increase production in the country, as the U.S. seeks to bring more chip manufacturing back to American soil. 

Among broader Asian chipmakers, Semiconductor Manufacturing International Corp (HK:0981)- the biggest chipmaker in China- rose 1.6%, while Japan’s Advantest Corp. (TYO:6857) added nearly 4%. 

TSMC earnings awaited for AI cues 

Taiwan Semiconductor Manufacturing Corp (TW:2330) (NYSE:TSM), or TSMC, fell slightly in Taiwan trade on Thursday, but remained in sight of record highs.

The firm is the world’s biggest contract chipmaker, and its earnings are widely viewed as a bellwether for global chip demand. 

TSMC clocked a nearly 17% increase in sales over the first quarter, monthly data showed. The chipmaker has forecast stronger earnings on the back of increased AI demand. 

Reuters estimates expect TSMC to report a net profit of T$217.2 billion ($6.7 billion), a 5% increase from last year. 

While demand is expected to have increased, TSMC is also set to incur growing costs as it ramps up production to meet growing demand. The firm recently received over $11 billion in U.S. grants and low-cost loans to increase production in the country, specifically at a planned facility in Arizona. 

TSMC is a key component of the global chip industry, and is also a major supplier to Nvidia- whose astronomic jump in valuation spilled over into TSMC over the past year. 

TSMC will report its earnings around 02:00 ET (06:00 GMT).

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