Which Taiwan Stocks Have Potential in the Second Half? Scholar Reveals 2 Key Sectors Where Tech Giants Are Investing: Foreign Firms Upgrade Target Prices

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Regarding the outlook for Taiwan's stock market in the second half of 2024, an economist has highlighted two key sectors expected to draw major investment. According to the analysis, semiconductor-related companies and firms supporting AI infrastructure are gaining particular attention amid the U.S.-China tech rivalry.

In recent years, Taiwan's technology firms have strengthened their global competitiveness in areas such as AI chips, advanced semiconductor manufacturing, and data center technologies. This has led to increased interest from foreign institutional investors in the U.S. and Europe. Companies within the supply chain centered around TSMC (Taiwan Semiconductor Manufacturing Company) are playing a leading role in next-generation technology development.

Multiple foreign brokerage firms have recently upgraded their target prices for major Taiwanese tech stocks. For example, Morgan Stanley raised its target price for TSMC from 850 to 920 Taiwan dollars while maintaining an 'Overweight' investment rating. This revision is attributed to surging demand for AI servers and the successful mass production of 3nm and 2nm process technologies.

The scholar noted, 'As U.S. technology restrictions on China tighten, Taiwanese firms are establishing themselves as reliable alternative suppliers.' This has accelerated global IT companies' efforts to strengthen partnerships with Taiwanese firms.

The two sectors drawing the most attention are:

- Photomask and semiconductor materials manufacturers: Companies supplying high-purity materials for extreme ultraviolet (EUV) lithography. - AI data center-related firms: Providers of high-speed communication modules, power management, and cooling technologies.

According to data from the Taiwan Stock Exchange, the average P/E ratio for tech stocks in Q2 2024 was 18.7, slightly above the five-year average, suggesting they remain relatively undervalued. Meanwhile, revenue growth for AI-related companies reached 23% year-on-year, significantly outpacing the market average.

Analysts advise, 'While short-term risks such as exchange rate fluctuations and geopolitical tensions should be monitored, mid-to-long-term investments in Taiwanese firms with technological advantages offer strong value.'

The Taiwanese government has been promoting its 'Asia High-Tech Innovation Hub' initiative since 2023, offering tax incentives for R&D investments and relaxed visa policies for foreign technical professionals. These measures have facilitated increased capital inflows and talent acquisition from abroad.

Going forward, Taiwan's tech firms are expected to deepen collaborations with partners in the U.S., Japan, and Europe while advancing supply chain diversification. Cooperation with Japanese firms in materials and equipment sectors is particularly likely to accelerate in the coming years.

Market observers have commented, 'Taiwan is evolving beyond a mere manufacturing base into a key hub for next-generation technology development,' emphasizing that continued policy support and innovation will be critical to sustaining this momentum.