Economy

Semiconductor Stocks Rally Following Strong Earnings and Reports of China Market Access

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Jan 28, 2026

THE BARE STORY

Semiconductor stocks surged on Wednesday driven by robust corporate earnings and reports regarding regulatory approvals in China. Major industry players, including Dutch equipment manufacturer ASML and South Korean memory chipmaker SK Hynix, posted financial results that signaled continued strong demand for artificial intelligence technology and memory components.

ASML reported record bookings for the fourth quarter of 2025, securing 13.2 billion euros in orders, a figure that significantly exceeded analyst expectations. The company projected total sales for 2026 to range between 34 billion and 39 billion euros. Alongside these results, ASML announced a 12-billion-euro share buyback plan and revealed intentions to reduce its workforce by approximately 1,700 positions, primarily in the Netherlands and the United States, in an effort to address organizational agility. The company stated that while revenue from China is expected to decrease due to export restrictions, overall demand remains high as customers expand capacity for AI development.

In South Korea, shares of SK Hynix closed more than 5% higher after the firm announced a record full-year profit for 2025. Market observers attributed the company's performance to a shortage of memory chips, which has led to unprecedented price increases for the components. ASML executives noted that major memory chipmakers are purchasing more equipment to increase production capacity in response to this shortage, which some analysts expect to persist through 2027.

Investor sentiment was further buoyed by reports that Chinese regulators have approved domestic technology companies—including ByteDance, Alibaba, and Tencent—to purchase Nvidia’s H200 chips. This follows earlier indications that the U.S. would authorize the sale of these systems. Following these developments, the VanEck Semiconductor ETF and shares of Nvidia experienced gains in trading.

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• Corporate restructuring involves significant workforce reductions Despite positive financial projections, ASML revealed intentions to cut approximately 1,700 positions, primarily in the United States and the Netherlands. The company described this reduction in workforce as a necessary measure to address organizational agility.

• Revenue headwinds persist due to export restrictions While some companies are seeing renewed access, ASML stated that its revenue from China is expected to decrease. This decline is attributed to ongoing export restrictions that limit the company's ability to service that specific market segment.

• Ongoing supply shortages are distorting market pricing Market observers noted that recent performance gains are partly driven by a shortage of memory chips which has caused unprecedented price increases. Analysts expect this shortage to persist through 2027, indicating that the sector faces long-term supply constraints rather than purely organic volume growth.

How it may affect me

As a U.S. reader: You may witness layoffs in the domestic technology manufacturing sector, as ASML announced intentions to reduce its workforce in the United States and the Netherlands to improve agility.

You could encounter higher prices for electronic devices through 2027, as analysts predict that ongoing memory chip shortages will continue to drive up costs for component manufacturers.

Your investment portfolio may see growth if it includes semiconductor assets, following rallies in stocks like Nvidia and related ETFs driven by strong earnings and renewed Chinese market access.

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