During overnight trading on July 27, 2026, Asian semiconductor stocks performed strongly in the US market. TSMC ADR (TSM) closed up 3.2% at $198.5, leading the entire Asian semiconductor sector. UMC ADR (UMC) followed closely, rising 2.8%; ASE ADR (ASX) climbed 2.5%; SMIC ADR (SMIC) edged up 0.8%. Overall, the Philadelphia Semiconductor Index gained 1.9%, while the Asian semiconductor ADR segment rose 2.3%, reflecting robust market confidence in Asian chipmakers.
AI chip demand sustains driving force, advanced process utilization rises
The primary catalyst for this rally was the continued strength of AI chip orders. According to industry chain sources, TSMC's 3nm and 5nm process capacity utilization is nearing full load, mainly driven by AI accelerator orders from clients such as NVIDIA, AMD, and Apple. TSMC recently raised its 2026 capital expenditure to $40 billion, with 75% allocated to advanced process expansion. Analysts note that AI chip demand for high-performance computing is driving upgrades across the entire semiconductor supply chain, particularly in advanced packaging and high bandwidth memory (HBM).
New progress in US CHIPS Act eases geopolitical risks
Another sentiment booster came from further implementation of the US CHIPS Act. On July 26, the US Department of Commerce announced $12 billion in new subsidies for multiple semiconductor companies, including TSMC and Samsung, for building advanced process wafer fabs in the US. This move alleviated market concerns over geopolitical risks, especially negative expectations regarding supply chain decoupling. TSMC's 3nm fab under construction in Arizona has entered the equipment installation phase, with mass production expected in 2027.
UMC, ASE and other second-tier players benefit from mature process recovery
Beyond advanced processes, the mature process segment also showed signs of recovery. UMC recently disclosed its Q2 2026 earnings, showing its 28nm and 22nm process utilization rebounding to 85%, with automotive and IoT chip orders improving. ASE benefited from advanced packaging (CoWoS) capacity expansion, with Q2 packaging revenue up 12% sequentially. Analysts believe that as AI permeates from cloud to edge, long-term demand for mature processes remains stable.
Semiconductor equipment stocks strengthen in tandem, signaling industry chain vitality
Semiconductor equipment stocks also gained in overnight trading. Applied Materials (AMAT) rose 2.1%, and Lam Research (LRCX) rose 1.8%. Equipment stock performance is often seen as a leading indicator of chip manufacturing activity. Recent equipment import data from Taiwan and South Korea both showed growth, suggesting accelerated wafer fab expansion. Additionally, Dutch lithography giant ASML's order backlog remains at historical highs, further confirming the sustainability of global chip capacity expansion.
Outlook: Focus on earnings season guidance and inventory destocking pace
Looking ahead, the market will closely watch the upcoming earnings season. TSMC plans to hold an investor conference on August 12, where it will release Q3 guidance. Analysts generally expect sequential revenue growth of 8%-10% and gross margin staying above 55%. Meanwhile, global semiconductor sales have grown month-over-month for five consecutive months, memory chip prices have stabilized and rebounded, and the industry is recovering gently from the cycle bottom. However, caution is warranted regarding the slow recovery of some end demand (e.g., consumer electronics) and short-term volatility from geopolitical fluctuations.
Overall, the overnight performance of Asian semiconductor ADRs reflects optimistic expectations for AI-driven growth and a risk appetite boost from policy tailwinds. As AI application scenarios expand, the entire chip design, manufacturing, and packaging/testing supply chain is poised to benefit, and Asian semiconductor companies will continue to play a core role in the global industry landscape.
