HONG KONGTAIPEI, July 21 Reuters Investors are putting aside geopolitical tensions to pile in to Taiwan stocks, with foreign inflows the biggest in years, thanks to soaring artificial intelligence and chipmaking stocks.

The wave of enthusiasm, which has also helped the techheavy Nasdaq to its best first half in 40 years, is running hard as the market is dominated like no other by top firms all along the computer hardware and software supply chains.

Net foreign buying of 12 billion over the six months to June is the biggest since the first half of 2008, and Taiwan39;s benchmark index performance it is up 20 in U.S. dollar terms this year is the best in Asia.

The sparkling rally has scarcely been dented by Taiwan39;s slowing economy, repeated shows of force by the Chinese military, or while war in Ukraine highlights what is at stake over the Taiwan Strait.

Rather, investors say it39;s all the more sturdy as the boggeddown conflict deters Chinese action and risks can be managed by keeping positions liquid with one eye on a possibly quick exit.

And, market watchers, say the AI rally has further to go.

What we are seeing now is a tactical trade, which tends to be based on a shorterterm investment horizon before the tech sector39;s valuation peak, said Carlos Casanova, Asia senior economist at Union Bancaire Privee.

A potential escalation of events in the Taiwan Strait down the line is less relevant for these investors, he said.

China claims democratically governed…