Chinese semiconductor companies rally as analysts see sooner industry recovery

 

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Chinese semiconductor companies stage a strong rally on speculation that some semiconductor equipment company’s new orders in May exceeded expectations.

SMIC, the country’s top chip maker, surged by 6.3% in Hong Kong to close at HK$21.2 per share, while its Shanghai-listed shares gained 2.5% to close at 55.04 yuan per share. Mainland investors bought a net 4.51 million shares of SMIC via the Shanghai – Hong Kong Stock Connect schem on Friday, marking the third consecutive day of net buying.

CICC said, based on communications with sources in the industry chain, orders for domestic semiconductor equipments showed signs of recovery in May from the previous month and it reiterated the forecast that domestic chip companies’ orders will be stronger this year, with new orders in the second half of the year expected to increase further.

Based on Chinese domestic equipment companies’ orders on hand around the first quarter, they are expected to maintain a growth of above 30% this year, the bank said.

CITIC Securities said in a note that, boosted by ChatGPT and AI concept in the first quarter of the year, the semiconductor sector is expected to recover sooner than expected.