HSBC Favors South Korean Memory Chips, Taiwan Semiconductors and China Tech Infrastructure

According to CNBC, HSBC said investors should focus on parts of the tech sector with stronger monetization and less-stretched valuations, including South Korean memory chips, Taiwanese semiconductors, and semi-equipment and power infrastructure in mainland China. The bank said these markets offer exposure to areas where demand remains strong and capacity remains constrained, while valuations are generally less stretched than in parts of the U.S. AI complex. HSBC said recent selling pressure in Korean memory chipmakers has eased and that fundamentals remain supported by capex-driven demand and rising shareholder returns. The bank added that lower volatility could help reduce the cost of equity and support valuations across the sector. HSBC also said the next stage of the AI trade in Taiwan is likely to broaden beyond graphics processing units as custom application-specific integrated circuits are increasingly used by hyperscalers, with persistent capacity constraints supporting pricing and utilization even as packaging investment accelerates. In mainland China, HSBC said it prefers domestically focused AI semiconductor and hardware stacks, citing policy support, localization and inference growth. The bank said rapid inference growth is increasing compute requirements and restrictions on foreign GPUs are accelerating localization, while supply constraints and less efficient local chips could broaden demand for packaging, networking and power.