Chinese semiconductor stocks climbed strongly on Wednesday as market participants grew more optimistic about the country's capabilities in artificial intelligence-related chip production and repositioned ahead of a slate of major industry events.
Traders put money into domestic chipmakers ahead of two significant developments: quarterly earnings from NVIDIA Corporation (NVDA), due later in the day, and an anticipated strike at Samsung's (005930.KS) South Korean chipmaking operations beginning Thursday.
In Hong Kong trade, Semiconductor Manufacturing International Corp (0981.HK), the largest Chinese foundry by capacity, rose 12%, while Hua Hong Semiconductor Ltd (1347.HK) advanced nearly 14%. Mainland-listed Cambricon Technologies Corp Ltd (688256.SS) and NAURA Technology Group Co Ltd (002371.SZ) increased 2.5% and 5.7%, respectively.
Some of the buying was attributed to social media-driven speculation that China had achieved a breakthrough in 3 nanometer chip production. The reports were not supported by verifiable information at the time.
Markets also reacted to the possibility that SMIC and Hua Hong could benefit if Samsung's strike led to supply interruptions. South Korean media projected that the strike could reduce global DRAM and NAND output by between 2% and 4%. While SMIC and Hua Hong trail Samsung on advanced-node foundry orders for 3nm and 4nm processes, they are positioned to fill gaps in larger, more mature nodes, creating a potential opening for increased output amid already tight global memory supplies driven by strong AI-related demand.
Across global markets, Chinese chipmaking names outperformed peers on Wednesday, even as the broader sector consolidated ahead of Nvidia's much-anticipated earnings report. Nvidia is widely expected to post another strong quarter, but market participants are focused on whether the company will signal continued momentum in AI-driven chip demand.
Optimism around AI-related chip demand pushed shares to record highs last week, but some profit-taking emerged this week. A recent rise in bond yields was also cited as an additional source of pressure on chip stocks.
Several Nvidia suppliers and other industry names declined on Wednesday: Taiwan Semiconductor Manufacturing Co. (2330.TW) and Hon Hai Precision Industry (2317.TW) fell by up to 2%. Samsung itself was down 2%, and in Japan Advantest Corp. (6857.T) slipped nearly 1%.
Market context and positioning
Investors appear to be balancing two near-term forces: enthusiasm about AI-driven demand and the immediate operational risks posed by labor actions at major memory producers. That dynamic helped lift Chinese foundry and chip-equipment stocks on the expectation they could capture displaced volumes in less advanced process nodes.
At the same time, the sector faces a near-term earnings test in Nvidia's results, which could reaffirm or temper the recent rally depending on the company’s messaging about AI momentum.