By Sam Nussey and Wen-Yee Lee
TOKYO/TAIPEI Oct 30 (Reuters) – Asian chip supply chain companies said on Friday that AI-related demand remained strong, while investor concerns persisted over whether the massive investments in AI infrastructure would generate adequate returns.
Foxconn Chairman Young Liu told reporters at a company event that AI was not in a bubble and demand for AI products remained clear. The contract electronics maker is Nvidia’s biggest AI server maker and Apple’s top iPhone assembler.
Alphabet, Intel and Amazon all fell overnight due to market concerns over whether returns will justify continued high capital expenditure. The caution spread to Asia on Friday, with technology stocks, including South Korea’s SK Hynix, Taiwan’s TSMC and Japan’s Advantest, coming under pressure.
“In the various conversations we are having with our customers, interest is very strong,” Tokyo Electron Chief Financial Officer Hiroshi Kawamoto told reporters at a briefing about the company’s half-yearly results.
The company, on Friday, forecast a stronger-than-expected 87% jump in operating profit to 1.17 trillion yen ($7.41 billion), underscoring robust demand for chipmaking equipment.
“At present, there are no signs that this is slowing down,” he said.
Despite concerns about AI-related spending, Asian suppliers of chips and chipmaking equipment continue to report strong results. SK Hynix said this week it would return about $75 billion to shareholders as higher memory prices boost profits.
On Friday Japanese memory chip maker Kioxia announced an interim dividend of 90 yen per share with excess cash to be used for shareholder returns from the second half of the fiscal year onwards.
The chipmaker forecasts non-GAAP operating profit of 2 trillion yen for the third quarter. Its shares have slide heavily from a peak in June.
Demand growth for AI will certainly continue although the rate may vary, said Rick Tsai, CEO of Taiwan chip designer MediaTek.
“Doubts over the Anthropic IPO, AI financing and wider AI adoption are holding back investors,” said David Gibson of MST Financial.
“It will take time to fix this week’s selloff.”
Tokyo Electron, a major supplier of equipment for processes such as deposition and etching to chipmakers, said it would spend up to 150 billion yen to buy back some 25 million shares. Its shares closed down 5% ahead of earnings.
In China, CXMT said it swung to a net profit for the quarter due to higher memory prices. The chipmaker became China’s most valuable listed company in July after its shares surged by more than five times in their Shanghai debut.
($1 = 157.8500 yen)
(Reporting by Sam Nussey, Anton Bridge, Wen-Yee Lee, Eduardo Baptista, Ben Blanchard and Che Pan; Editing by Subhranshu Sahu and Janane Venkatraman)
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