Taiwan stocks rallied to a 5-1/2 year high on Wednesday as the best gains in a year for US shares sparked hopes for solid growth potential for their technology product suppliers, such as High Tech Computer.
The benchmark TAIEX closed 0.71 percent higher at 7,038.78 points, its highest closing level since September 15, 2000, when it finished at 7,155. The electronics sub-index rose 1.25 percent.
"Taiwan shares have been strong in the last few days thanks to signs of better cross-strait ties. Now, they got a further boost from the stellar performance of US shares," said Alex Huang, an assistant vice president of Barits International Securities.
Shares worth T$143.6 billion (US $4.4 billion) changed hands, marking it the busiest session since January 6. Powerchip Semiconductor, one of the world's largest dynamic random access memory (DRAM) chip makers, jumped 2.12 percent.
Taiwan Semiconductor Manufacturing Co rose 2.21 percent amid 2006 promising outlook, some analysts said. The world's largest contract chip maker has said it planned to increase capacity to meet growing demand in products such as consumer electronics.
Motech Industries, Taiwan's largest solar cell maker, led a rally in oil alternatives after oil prices jumped to a record high on Tuesday. Motech, E-Ton Solar, Topco Scientific and Wafer Works all soared by the maximum 7 percent daily limit.
Motech signed a letter of intent on Tuesday to buy solar wafers from MEMC Electronic Materials Inc over an eight-year period. The deal could generate at least US $1.6 billion in revenues for MEMC.
Largan Precision, one of the world's top makers of lenses used in high-grade camera phones, surged 7 percent. Company chairman told investors on Tuesday its quarterly pretax profit had grown 571 percent from a year earlier. Largan's gross margin of 61 percent in the quarter beat analyst expectations.