Asia's biggest makers of computer chips have given investors such as Nobuyoshi Tsumori reason to anticipate that their shares will rally this year.
Semiconductor companies such as Samsung Electronics Co and Fujitsu Ltd are investing more money in the business even after demand for their products failed to keep pace with production last year, causing prices to slide and inventories to rise.
"Boosting capital spending is a sign of optimism in the market," said Tsumori, a fund manager in Tokyo for Barclays Global Investors Ltd, which oversees the equivalent of US$907 billion. "These companies are showing they're positive that demand will recover, and they're trying to get ahead of the curve and become more competitive."
Five chipmakers, including Samsung, Fujitsu and Toshiba Corp, were among the six best performers in the Morgan Stanley Capital International (MSCI) Asia Pacific Information Technology Index during the past month. Their gains helped the industry measure, which had last year's second-smallest advance out of 10 groups, better the regional benchmark.
The MSCI technology index gained 4.6 percent last month, outpacing a 3.3 percent advance by the MSCI Asia Pacific Index.
The industry measure last week gained 0.4 percent, trailing a 1.2 percent increase in the regional benchmark, as Samsung's shares fell 2.2 percent. Fujitsu's added 0.6 percent.
Samsung, the world's biggest maker of computer memory chips, has jumped 13 percent since saying on Jan. 14 that it would boost spending by 34 percent this year to 10.27 trillion won (US$10.2 billion).
Fujitsu, Japan's biggest maker of computer servers, has gained 10 percent since saying on Feb. 8 that it would increase investment in semiconductors by about 80 percent to ?90 billion (US$853 million) in the business year starting April 1.
Toshiba, Japan's second-biggest chipmaker, last month said it would increase investment in flash-memory chips by ?24 billion as it boosts production fourfold. The company's shares climbed 5.9 percent since the announcement.
Taiwan Semiconductor Manu-facturing Co (台積電), the world's largest supplier of made-to-order chips, on Jan. 28 said it would invest US$2.6 billion this year, 8 percent more than a year ago. The stock has risen 5.4 percent since then.
"These are companies that are doing the smart thing by spending in the downturn so they're ready for the rebound," said Koichi Ogawa, who helps manage the equivalent of US$8.6 billion in Japanese equities as chief portfolio manager at Daiwa SB Investments Ltd.
"Demand will recover later this year," he said.
Chipmakers must also spend to compete with US companies such as Intel Corp and Texas Instruments Inc. Intel, the largest maker of personal computer chips, said last month that spending on plants and equipment this year will rise as much as 40 percent to US$5.3 billion.
Asian computer-related stocks were raised to "overweight" from "underweight" by Kishore Suratkal, head of technology research in Asia at Macquarie Securities Ltd, six weeks ago.
Market-research firms are split on the chip industry's outlook. Santa Clara, California-based VLSI Research Inc has predicted an 8.8 percent sales increase this year. Scottsdale, Arizona-based IC Insights Inc has forecast a 6 percent drop.
Growth in chipmakers' spending globally may slow this year to 1.9 percent from 27.2 percent last year, Isuppli Corp, a firm in El Segundo, California, forecast on March 1.
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