Taiwan’s Tech Sector Rockets to New Highs Amid AI and Semiconductor Surge

The Taiwan stock market witnessed an extraordinary surge as demand for artificial intelligence (AI) and semiconductor technology propelled tech stocks to unprecedented heights. Investors’ optimism soared as the Taiwan Weighted Index peaked at 20,296, though it later moderated gains. Projections indicate a potential climb to 24,000 by the year’s end, with Paul You, Chairman of First Securities Investment Corporation, expressing confidence in further strengthening the rally.

Chip giant TSMC, serving as Nvidia’s primary contract manufacturer, saw its shares soar by over 30% this year, buoyed by Nvidia’s performance. Moreover, equipment assembly firms like Quanta Computer and Wistron Corporation experienced significant upticks, reflecting the broader enthusiasm for Taiwan’s tech sector.

Analysts attribute the rally not only to the burgeoning demand for AI and semiconductor technology but also to post-election investment boosts. Alicia Garcia-Herrero, Natixis’ Chief Economist for Asia Pacific, highlighted the robust AI demand, predicting its continued contribution to market growth.

Despite the stellar performance of semiconductor and AI sectors, attention is drawn to undervalued domestic sectors such as precision machinery, automation technology, and consumer sectors by Paul You. He suggests potential sector rotation to drive the benchmark index even higher.

However, Goldman Sachs cautioned about the market’s narrow breadth, noting that less than half of Taiwan’s stocks have delivered positive returns year to date. Nevertheless, investors remain bullish on Taiwan’s tech sector, anticipating sustained momentum and potential sector diversification in the near term.