(Reuters) - Shares of chipmakers rose on Wednesday after Micron Technology Inc forecast a recovery in chip demand in the second half of the year, easing concerns that rising trade tensions would exacerbate a slump in the sector.

The company also said it had resumed some shipments to Huawei Technologies after reviewing a U.S. ban on selling products to the Chinese smartphone maker.

The ban and an escalation in the trade war between the United States and China have threatened growth in a sector that is already grappling with oversupply.

But Micron's upbeat results and positive commentary on the demand outlook provided some hope, sparking a rally in beaten down shares of chipmakers.

Micron shares were up 10%, while those of Nvidia Corp, Intel Corp, Xilinx Inc and Advanced Micro Devices rose between 2% and 6%. Lam Research and Applied Materials also gained.

European peers including STMicroelectronics, Infineon, Dialog Semiconductor, BE Semiconductor and Siltronic were all trading higher.

"The bulls in Micron could simply not have asked for more," Evercore analysts' wrote in a note.

(Graphic: Micron YTD performance - https://tmsnrt.rs/2ZT1saX)





U.S. chipmakers suspended shipments to Huawei after the U.S. government on May 15 added the world's biggest telecoms equipment maker and 68 affiliates to an "Entity List", banning it from acquiring components and technology from U.S. firms without government approval.

Micron said it was unable to predict the volumes or time periods over which it will be able to ship products to Huawei, its biggest customer.

Analysts' from Morningstar said Micron results showed signs of improvement "against a weak market environment and fears that those conditions might be prolonged".





(Reporting by Sayanti Chakraborty in Bengaluru; Editing by Sweta Singh and Saumyadeb Chakrabarty)