A sector-wide downturn affected Asian semiconductor stocks on Friday, primarily driven by a significant drop in SoftBank, following Nvidia‘s sharp decline overnight, which contradicted its better-than-anticipated earnings and optimistic forecast.
SoftBank dropped more than 10% in Tokyo. The Japanese technology conglomerate recently sold off its Nvidia shares but still owns British semiconductor firm Arm, which provides Nvidia with chip architecture and designs.
SoftBank is also engaged in several AI projects that utilize Nvidia’s technology, including the $500 billion Stargate initiative for data centers in the U.S.
South Korea’s SK Hynix declined nearly 10%. The memory chip manufacturer is Nvidia’s leading supplier of high-bandwidth memory utilized in AI applications. Samsung Electronics, a competitor also supplying Nvidia with memory, dropped over 5%.
Taiwan Semiconductor Manufacturing Company, the largest contract chipmaker globally and manufacturer of Nvidia’s chip designs, was down over 4% in Taipei.
Taiwan’s Hon Hai Precision Industry, also referred to as Foxconn, which produces server racks intended for AI workloads, fell 4.86%.
The decline among major Asian semiconductor companies followed Nvidia’s drop of more than 3% in the U.S. on Thursday, despite surpassing Wall Street’s expectations during its third-quarter earnings report the previous night.
The firm also offered a stronger-than-expected sales guidance for the fourth quarter, which analysts suggest could elevate earnings projections across the industry.
Billy Toh, regional head of retail research at CGS International Securities Singapore, stated Nvidia was affected by a combination of a Bitcoin market decline, potential postponement of Fed rate cuts, and generally tighter financial environments.
“Combined with the ongoing discussions of an AI bubble, leading to a broader risk-off shift, it’s natural for Nvidia to emerge as one of the initial pressure points,” he expressed to CNBC.
Smaller chip companies in Asia also faced difficulties. In Tokyo, Renesas Electronics, a crucial supplier for Nvidia, decreased by 3%. Tokyo Electron, which provides vital chip manufacturing equipment to foundries that produce Nvidia’s chips, fell 6.6%.
Another Japanese manufacturer of chip equipment, Lasertec, experienced a decline of 5.2%.
