China chipmaking stocks rally as Nvidia earnings, Samsung strike loom

Chinese chipmaking stocks rose sharply on Wednesday amid increasing optimism over the country’s artificial intelligence capabilities.

Investors bought into the sector before a storm of major cues for the chipmaking industry, with bellwether NVIDIA Corporation (NASDAQ:NVDA) set to report quarterly earnings later in the day, while Samsung’s (KS:005930) South Korean chipmaking operations were set to go on strike from Thursday.

Semiconductor Manufacturing International Corp (HK:0981), China’s biggest chipmaking by capacity, jumped 12% in Hong Kong trade, while Hua Hong Semiconductor Ltd (HK:1347) jumped nearly 14%. Mainland-listed Cambricon Technologies Corp Ltd (SS:688256) and NAURA Technology Group Co Ltd (SZ:002371) rose 2.5% and 5.7%, respectively.

Chipmaking stocks were benefited by social media speculation that China had achieved a breakthrough in 3 nanometer chipmaking technology. But no verifiable reports were immediately available.

Speculation over SMIC and Hua Hong potentially benefiting from a strike at Samsung also spurred buying in the two, which are China’s biggest foundries.

Samsung’s strike is expected to disrupt global DRAM and NAND output by between 2% and 4%, South Korean media reported.

While SMIC and Hua Hong lag Samsung in advanced-node foundry orders– specifically 3/4nm, they could fill supply gaps in bigger, more mature nodes. This presents a potential opportunity for the two companies, especially in the face of already tight global memory supplies due to the artificial intelligence boom.