Korean chipmaker shares rally as Nvidia expects revenue boom

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Korean chipmaker shares rally as Nvidia expects revenue boom

Nvidia headquarters in Santa Clara, California [REUTERS/YONHAP]

Nvidia headquarters in Santa Clara, California [REUTERS/YONHAP]

 
Nvidia's bullish forecast for its profitability led to a surge in prices of Korea's major chipmakers, as the projection boosted expectations for high-end chips used in large-scale artificial intelligence computing systems.
 
SK hynix surged 5.94 percent to close at 103,500 won ($78) Thursday and recovered the 100,000-won mark for the first time since July 29 last year. It opened at 104,300 won, up 6.76 percent.
 
The Korean chipmaker supplies high-end memory chips called high bandwidth memory (HBM). HBMs fit into Nvidia's latest A100 processors that train the ChatGPT in data centers. These chips vertically stack layers of dynamic random access memory (DRAM) to better support high-performance computing and cost about five times more than conventional DRAMs.
 
Samsung Electronics stock closed at 68,800 won, up 0.44 percent from the previous session's close. It traded at 70,000 won when the market opened in the morning, hitting the 70,000-won mark for the first time in 14 months, but could not retain its gains throughout the session.
 
Samsung Electronics released its own HBM dubbed HBM-PIM (processing-in-memory) last year, supplied to the California-based chip designer AMD. Korea's top market cap touted that HBM-PIM is the first memory chip embedded with an AI processor designed to bring powerful AI computing capabilities and high-performance memory.
 
Both chipmakers reached their 2023 highs on Thursday.
 
The Kospi shrank by 0.5 percent as sectors in general slipped, but the semiconductor sector closed higher by over 1 percent on average to cushion the fall.
 
Nvidia shares traded up 25 percent after the bell on Wednesday on a report that high demand for AI processors would fuel its revenue growth.
 
The U.S. chipmaker said it expects second-quarter revenue to come in at about $11 billion, plus or minus 2 percent, beating Wall Street estimate of $7.2 billion by more than 50 percent.
 
Nvidia CEO Jensen Huang said in a statement the company is "significantly increasing supply to meet surging demand" for its data centers.
 
The advance in extended trading brought Nvidia stock to an all-time high.
 
Even before its after-hours move, Nvidia stock was up 109 percent this year, jumping on the AI bandwagon that exploded earlier this year as a lead player in the market. It is the S&P 500's best performer hitherto.
 
Shares of Nvidia's suppliers also rallied on the back of Nvidia's confidence. Taiwan Semiconductor Manufacturing Company rose 3.43 percent, and Japan's equipment supplier Advantest Corporation spiked 16 percent to an all-time high.
 
"The market has been raising concerns about the semiconductor sector taking the AI expectations too far, but this earnings season proved that AI demand is much stronger than forecasted," Moon Joon-ho, a Samsung Securities analyst, said.
 
The fact that Nvidia is the top beneficiary among chipmakers was affirmed, he added.

BY SOHN DONG-JOO [sohn.dongjoo@joongang.co.kr]
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