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Shares of semiconductor companies rallied on Wednesday, driven by strong earnings reports and a positive shift in geopolitical developments related to U.S. export restrictions on China.
AMD led the gains, with its shares rising 5% by mid-morning following a robust second-quarter financial report. The company reported better-than-expected earnings, fueled by impressive growth in its data center business and strong sales of its GPUs, which are essential for training AI models.
The positive earnings news also buoyed other U.S. chipmakers. Nvidia saw its shares increase by 10%, while Qualcomm also experienced gains.
In addition to strong earnings reports, the semiconductor sector was buoyed by geopolitical news. Reuters reported that the U.S. might expand a rule restricting the export of semiconductor-related equipment to China but could exempt key allies such as Japan, the Netherlands, and South Korea. This contrasts with a previous Bloomberg report suggesting that these countries might be included in the restrictions.
The potential exemption from these new restrictions contributed to gains for South Korean semiconductor giants Samsung and SK Hynix. Samsung’s shares closed 3.58% higher following a report of a staggering 1,458.2% year-on-year increase in second-quarter operating profit, while SK Hynix shares rose 3%.
Dutch semiconductor equipment manufacturer ASML saw its shares climb as much as 10%, and Japanese chip equipment maker Tokyo Electron closed up 7.41%, reflecting the broader optimism in the sector.