Asian chipmakers report strong AI demand despite investor concerns over spending

Asian semiconductor companies are continuing to benefit from strong demand for artificial intelligence-related products although concerns remain among investors about whether heavy spending on AI infrastructure will deliver sufficient returns.

Asian semiconductor companies are continuing to benefit from strong demand for artificial intelligence-related products although concerns remain among investors about whether heavy spending on AI infrastructure will deliver sufficient returns.

Foxconn Chairman Young Liu said on Friday that artificial intelligence was not experiencing a bubble adding that demand for AI products remained strong. Foxconn is Nvidia’s largest AI server manufacturer and Apple’s leading iPhone assembler.

His comments came as technology stocks faced pressure across global markets following concerns over the scale of investment required to develop AI infrastructure. Shares of Alphabet, Intel and Amazon declined overnight while the cautious sentiment spread to Asia affecting major technology companies including South Korea’s SK Hynix, Taiwan Semiconductor Manufacturing Company (TSMC) and Japan’s Advantest.

Tokyo Electron a major supplier of semiconductor manufacturing equipment also reported strong business prospects. Chief Financial Officer Hiroshi Kawamoto said customer interest remained high and there were currently no indications that demand was slowing.

The Japanese company forecast an 87% increase in operating profit to 1.17 trillion yen ($7.41 billion), exceeding market expectations. The projection highlights continued demand for equipment used in chipmaking processes such as deposition and etching.

Other Asian suppliers have also reported encouraging developments. South Korean memory chipmaker SK Hynix said earlier this week that it planned to return approximately $75 billion to shareholders as rising memory prices strengthened its profits.

Japanese chipmaker Kioxia announced an interim dividend of 90 yen per share on Friday. It also said excess cash would be directed towards shareholder returns from the second half of the fiscal year. The company expects third-quarter non-GAAP operating profit to reach 2 trillion yen.

MediaTek Chief Executive Rick Tsai said demand for AI would continue growing although its pace could change over time.

However investors remain cautious. David Gibson of MST Financial said uncertainty surrounding a potential Anthropic IPO AI financing and broader adoption of the technology was weighing on market sentiment. He added that recovering from the week’s selloff would take time.

Tokyo Electron also announced plans to spend up to 150 billion yen on purchasing approximately 25 million of its own shares. Its stock had closed 5% lower ahead of its earnings announcement.

Meanwhile China’s CXMT reported a quarterly net profit supported by higher memory prices adding to signs of strength across Asia’s semiconductor industry.