Techs turn corner as chips soar

A ROSY forecast from an industry trade group and good earnings from companies in the sector helped Asian chipmakers and other hi-tech firms advance on expectations demand will strengthen right through next year.

The buy orders also came flooding in after overnight gains on the tech-laden Nasdaq and the Dow, spurred by the Federal Reserve's decision to leave US interest rates unchanged.

In Tokyo, Advantest, which makes chip-testing equipment, surged 560 yen, or 7.2%, to 8390, Tokyo Electron jumped 510 yen to 8090, a 6.7% gain, and Fujitsu added 25 yen, or 3.7%, to 697. Their gains helped the benchmark Nikkei 225 Average rise to 10,739.22, up 178.21 points, or 1.7%.

A fresh assessment from the World Semiconductor Trade Statistics Group said global sales this year would be 14% better than last year, with 20% growth next year. Beyond that, 2005 was expected to see continued healthy demand, with a renewed downturn not expected until 2006.

Japanese giant Sony's plan to pare its global workforce, trim costs and revamp its consumer electronics division won a qualified thumbs-up from investment house Goldman Sachs. 'It's not that we are bullish on the stock, but the share price no longer appears overvalued after factoring in the boost from the planned additional fixed-cost cuts,' it said, raising Sony to in line from underperform. The shares added 110 yen, or 2.9%, to 3970.

Rival Matsushita Electric Industrial, which makes Panasonic and Technics goods, firmed 98 yen, or 7.2%, to 1455 after lifting the veil on decent figures yesterday.

Banks, the driving force behind much of the Japanese market's recent strength, saw more gains on the back of better-than-expected industrial output data. Mizuho Financial added 3000 yen, or almost 1%, to 294,000, while UFJ rose 13,000 yen, or 2.6%, to 515,000.

Brokers said investors were also encouraged by Tuesday's results from Taiwan Semiconductor Manufacturing. The world's largest contract chipmaker had posted its best quarterly performance since the tech downturn started three years ago, saying facilities were running close to capacity and investment would be stepped up next year. It surged 3.7% to T$70.50, supporting Taiwan's Weighted index, which added 20.42 points to 6095.87 points, up 0.3%.

The hi-tech theme was also evident in Singapore, where the Straits Times index climbed 16.87 points to 1752.97. The rise was paced by Chartered Semiconductor, a State-linked contract chipmaker, which traded at S$1.86, four cents better for a 2.2% gain.

Singapore Airlines picked up 10 cents to S$11.70 ahead of quarterly figures. Brokers said investors would look for further signs of recovery from Sars-driven losses earlier in the year and news on plans to set up a budget airline.

Banks benefited from the gathering perception that economic growth at home and abroad will be better next year. United Overseas Bank ticked up 10 cents, or 0.8%, to S$13.90 and DBS put on 30 cents to S$14.60, a 2.1% advance.

The sunny mood pushed Hong Kong higher, with banks and developers taking their cue from Wall Street. The Hang Seng index rose 47.50 points to 12,139.38 as Bank of East Asia put on 50 cents, or 2.2%, to HK$23.60.