** Hong Kong shares of Hua Hong Semiconductor 1347.HK surge 6.3% to HK$93.5, set for biggest one-day pct gain since January 28

** Stock second biggest pct gainer on Hang Seng TECH Index .HSTECH, which rises 2.2%

** Shanghai-listed stock 688347.SS climbs 3% to 122.69 yuan

** China's second-largest chipmaker Hua Hong Group develops advanced manufacturing tech to produce AI chips, four people familiar with the matter said

** Group's contract chipmaking business, Huali Microelectronics, is readying a 7-nanometre chipmaking process at its Shanghai plant, the people said

** Hua Hong Group, Huali, its sister company Hua Hong Semiconductor did not respond to requests for comment

** YTD, HK stock up 24.7%, Shanghai-listed shares up 12.8%

(Reporting by Donny Kwok)

((donny.kwok@thomsonreuters.com))