Following a significant drop in Nvidia’s stock price, Asian semiconductor stocks experienced a decline during morning trading. The U.S.-based chipmaker, Nvidia, saw a sharp decrease of over 9% in regular trading, which subsequently influenced the semiconductor sector in Asia. This downward trend was part of a broader sell-off on Wall Street, triggered by concerns regarding the U.S. economy’s well-being.
The repercussions of Nvidia’s performance extended to South Korea, affecting key players in the semiconductor industry such as SK Hynix and Samsung Electronics. As Nvidia’s value chain includes partnerships with these companies, their stock prices also took a hit. Samsung shares fell by 2.6%, while SK Hynix experienced a more significant drop of over 6%, leading to a 2.5% decline in the Kospi index. Additionally, the Kosdaq, which represents small-cap stocks, plummeted by 3%.
Companies directly involved in supplying components to Nvidia faced substantial losses as well. Tokyo Electron, a supplier of the high bandwidth memory chips that Nvidia utilizes in its AI chipsets, witnessed a 7% decrease in its stock price. Similarly, Advantest, a semiconductor testing equipment supplier, saw its shares drop by more than 8%. SoftBank Group, a Japanese investment holding company with a stake in chip designer Arm, also experienced a 6% decline in its stock value.
Taiwan Semiconductor Manufacturing Company (TSMC), a contract chip manufacturer responsible for producing Nvidia’s high-performance graphics processing units, registered a decline of 4.3% in its stock price. These units play a crucial role in powering large language models used in machine learning applications. Another Taiwanese company, Hon Hai Precision Industry, commonly known as Foxconn, faced a 5% decrease due to its strategic partnership with Nvidia.
The substantial loss of $279 billion in market cap incurred by Nvidia in the U.S. had ripple effects on the global semiconductor industry. Asian markets, particularly in South Korea and Taiwan, felt the impact of Nvidia’s downturn, highlighting the interconnected nature of the semiconductor supply chain. The situation serves as a reminder of the vulnerability of the industry to external factors and the importance of closely monitoring developments in the tech sector.