Hong Kong semiconductor stocks jump 8% as AI rebound takes hold

Hong Kong-listed Chinese semiconductor stocks surged in afternoon trading Monday, extending a global AI sector rebound as investors returned to beaten-down chip names.

The Hang Seng Index rose 1.9% to 22,845 as semiconductor stocks led gains, with Hua Hong Semiconductor (1347.HK) climbing 8% and SMIC (0981.HK) adding 5%. GigaDevice, a mainland China-listed chipmaker, jumped 14% in Shanghai trading.

"The AI trade is far from over — what we saw last week was a necessary correction after an extraordinary run," said Euntaek Lee, an analyst at KB Securities. "Current conditions do not point to a bubble."

The rally in Hong Kong mirrored a broader recovery across Asian tech markets. Japan's Nikkei 225 added 0.3%, South Korea's KOSPI edged 0.2% higher, and Australia's S&P/ASX 200 advanced 0.7%. Mainland China's CSI 300 gained 0.4%, while the Shanghai Composite climbed 0.5%. The moves followed a volatile week that saw the Nasdaq 100 fall more than 3% on Tuesday before staging a partial recovery.

The semiconductor sector's rebound shows continued investor appetite for AI-related chips, even as questions persist over whether lofty valuations can be sustained. Hong Kong-listed Baidu (9888.HK) surged more than 7% after reports that its AI chip unit Kunlunxin is targeting a Hong Kong initial public offering at a valuation of about $50 billion, a sign of the premium investors still place on domestic AI semiconductor assets.

The gains in Hong Kong chip stocks came as part of a broader rotation back into technology names after last week's selloff erased hundreds of billions of dollars in market value from global semiconductor companies. The iShares Semiconductor ETF, which had fallen sharply midweek, recovered some ground as investors judged the pullback overdone.

China's push to strengthen its domestic semiconductor supply chain has provided additional support for locally listed chipmakers. Beijing's recent addition of 20 Japanese entities to its export control list for dual-use items has reinforced the case for Chinese companies to develop homegrown alternatives, traders said.

Baidu's Kunlunxin IPO fuels chip optimism

Baidu's 7% surge added momentum to the semiconductor rally. The company's AI chip unit Kunlunxin confidentially filed for a Hong Kong listing earlier this year, and reports Sunday said it is targeting a valuation of about $50 billion. Prospective investors were asked to buy semiconductors worth three to seven times the value of their intended investment in the planned listing, according to The Information, a sign of strong demand for Chinese AI chip capacity.

Kunlunxin chips have drawn interest from ByteDance, the owner of TikTok, according to a Reuters report. The unit mainly supplies chips to its parent company Baidu but has expanded external sales over the past two years.

Cross-asset context

The Hang Seng Index's 1.9% gain outpaced most regional peers. The CSI 300's 0.4% advance in Shanghai was more muted, while Hong Kong's turnover exceeded the 20-day average as institutional buyers rotated into semiconductor names. The offshore yuan traded at 7.23 per dollar, little changed on the session, as traders awaited U.S. labor market data later this week.

This article is for informational purposes only and does not constitute investment advice.