TSMC, Samsung Lead Asian Chip Stock Rally as Rate Concerns Fade

$Taiwan Semiconductor(TSM.US)$ Asia’s biggest chipmakers Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. climbed as slower US inflation data sparked bets that the Federal Reserve’s rate hikes will moderate.

TSMC surged as much as 8.5%, the most since July 2020, while Samsung rose 4.6%. The Bloomberg Asia Pacific Semiconductors Index jumped 7.6%, the most since March 2020, following a 10% advance in the US industry benchmark Philadelphia Semiconductor Index overnight.

Friday’s gains extended this month’s rebound for sector, but the Bloomberg Asia chip gauge is still down 37% so far in 2022. Semiconductor stocks and the broader tech sector were pummeled this year by concerns of rate hikes, global recession and valuations.

The rally may not last, as investors could look to take profits following the bounce, according to Diana Wu, senior manager at Capital Securities Corp. “As to the long-term, I think the global economy will slow down, as inflation remains at high levels which will hurt growth. In addition, the trade war between China and the US has increased manufacturing costs, with the supply-chain premium diminishing.”

TSMC also got a lift from its report Thursday that its October sales jumped 56% from a year ago, signaling that the world’s largest contract chipmaker is continuing to weather a slowdown in electronics demand. Still, even bad news didn’t seem to matter as chip-tool maker Tokyo Electron Ltd. gained nearly 10% after cutting its full-year outlook.