July 15, 2009 / 12:42 AM / 10 years ago

Asian tech shares rise; Intel boosts recovery hopes

SEOUL/TAIPEI (Reuters) - Asian technology shares from South Korean chip firms to Taiwanese PC makers jumped on expectations the worst was over for the battered technology sector following Intel’s robust outlook and results.

The strong earnings at Intel, the world’s biggest maker of semiconductors, confirmed electronics demand was holding up in Asia and added to growing confidence the chip sector was turning around after a steep and lengthy slump.

“The Intel news is greeted most by chip makers as strong PC processor sales mean more revenue for chips. It is also a sentiment-booster for the overall electronics sector,” said Park Young-joo, an analyst at Woori Investment & Securities in Seoul.

The market for dynamic random access memory (DRAM) chips, used mainly to power PCs, has stabilized after being ravaged by weak demand and plummeting prices for two-and-a half years.

There are signs of a rebound.

Last week, Samsung Electronics, the world’s top maker of memory chips and flat screen TVs, forecast second-quarter earnings well above market estimates, and analysts expect Samsung’s semiconductor unit to swing to profit in the last quarter.

By 0350 GMT, shares in Samsung Electronics rose 5.0 percent, hitting their highest level in more than a year, and second-ranked Hynix Semiconductor gained 3 percent.

In Taiwan, the world’s No. 3 PC brand Acer and the top contract chip maker TSMC both advanced more than 3 percent after Intel said revenue from the low-cost, low-power Atom processor soared 65 percent from the first quarter.

The Atom processor runs on many of Acer’s highly successful netbook PC line, while TSMC has an agreement with Intel to jointly develop and manufacture these chips.

“At least for the rest of this week, the electronics sector will show some really good momentum,” said Calvin Huang, an analyst at Daiwa Institute of Research in Taipei.

Japanese chip equipment maker Advantest and Tokyo Electron also rose and so did suppliers of wafer used in chip production, Sumco and Shin-Etsu Chemical.

Intel’s results and outlook blew past Wall Street forecasts on better-than-expected consumer demand for PCs, especially in Asia, although the corporate market was weak.

Intel’s microprocessors are used in more than three-quarters of the world’s personal computers, so its results are a barometer for the global PC sector.

Adding to the bullish tone, U.S. programmable chip maker Altera Corp also beat quarterly results.

Loss-making Dutch chip equipment maker ASML reports results later on Wednesday.

MSCI’s Asia technology index ex-Japan gained 2.4 percent, leading the 1.5 percent rise in broader Asian markets.

US ECONOMY WOES LINGER

Analysts said most of the bad news might be behind the memory chip industry but some doubts remain.

For the chip and PC industry, analysts bet on the usual seasonal boost from back-to-school and holiday demand but retained a cautious view on the global economy’s outlook.

“The U.S. economy remains depressed, although Asia provides hope,” said Woori’s Park. “There remain concerns that the technology sector could slow down rapidly in the fourth quarter.

Most Asian technology firms, from memory-chip makers to handset vendors, are still feeling the effects of the global economic crisis, which has weakened demand for electronics and gadgets.

Some analysts warned that any sharp rise in output may derail the fragile recovery.

“The question is, will supply also pick up as much as demand? This could bring about supply glut that had pestered memory chip market,” said Kim Gee-soo, an analyst at Goodmorning Shinhan Securities in Seoul.

Additional reporting by Jungyoun Park in Seoul and Mayumi Negishi in TOKYO; Editing by Jonathan Hopfner and Anshuman Daga

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