By Sherry Qin

Shares in China's largest chip maker continued to rally amid buoyant investor sentiment on China's artificial-intelligence development and accelerated chip localization.

Semiconductor Manufacturing International Corp. shares in Shanghai rose as much as 5.2% on Monday before paring gains to about 2.7% in afternoon trading, extending Friday's 10% advance. Its Hong Kong-listed shares climbed an additional 3.7% on Monday, taking gains to more than 16% over the past four sessions.

Chinese technology giants and startups have been racing to make AI models cheaper, faster and more specialized. Analysts have said that the computing hardware supply chain, including chip companies, could benefit from their intensified investment in AI.

Most recently, ByteDance, TikTok's parent company, introduced a new visual recognition large language model capable of identifying and interpreting visual content. It also updated its most advanced large language model, Doubao Pro, whose comprehensive capability ByteDance said is "on par with GPT-4o" but costs one-eighth the price.

The average daily token use of the Doubao large language model has exceeded 4 trillion, up 33-fold since May, Tan Dai, president of ByteDance's Volcano Engine cloud unit, said at last week's launch event.

The visual recognition model could open up opportunities for consumer-focused AI applications and products, such as AI glasses, Huaxin Securities said in a research note.

Meanwhile, China's chip industry has accelerated chip localization as the U.S. prepares new AI chip restrictions to close China's backdoor access, The Wall Street Journal reported earlier this month.

As China's largest foundry with the most advanced fabrication technology in the country, SMIC is expected to capitalize on the localization trend, DBS said in a recent note.

Daiwa analyst Rick Hsu struck a note of caution, however. He questioned the real benefit of order reallocation on SMIC's business, as the chip maker makes mostly mature nodes rather than cutting-edge AI chips.

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

December 23, 2024 00:59 ET (05:59 GMT)

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