HSBC's recent analysis highlights the importance of targeting specific areas within the tech sector that exhibit strong monetization potential and less stretched valuations.
The bank emphasizes South Korean memory chipmakers and Taiwanese semiconductors as key investment opportunities, noting that despite recent stock corrections in Korea, the fundamentals remain robust, driven by capital expenditure and increasing shareholder returns.
HSBC's strategists, led by Alastair Pinder, believe that the selling pressure in these markets is easing, which could lead to reduced volatility and improved valuations. Additionally, they see potential in Taiwan's semiconductor market as it evolves beyond graphics processing units to include custom application-specific integrated circuits, driven by demand from hyperscalers.
In mainland China, HSBC recommends focusing on domestically oriented AI semiconductor and hardware sectors, where policy support and localization efforts are boosting demand. The bank notes that while China faces supply constraints, the inefficiency of local chips may actually expand demand in related sectors such as packaging and power infrastructure