The semiconductor stocks in Asia experienced a decline on Wednesday morning due to the substantial drop in Nvidia’s share price in the U.S. This reaction was triggered by Nvidia’s over 9% decline in regular trading, which reverberated through the semiconductor sector as a whole. The sell-off on Wall Street was intensified by economic data released on Tuesday, which fueled concerns about the state of the U.S. economy. This chain of events led to a chain reaction that affected various semiconductor-related companies in Asia.
Impacted Companies and Market Performance
In South Korea, major players in the semiconductor industry such as memory chip maker SK Hynix and tech giant Samsung Electronics faced significant share price decreases. Samsung shares dropped by 2.6%, while SK Hynix witnessed a more substantial decline of over 6%. These declines had a ripple effect on the Kospi index, which fell by 2.5%, and the smaller Kosdaq, which experienced a 3% drop. SK Hynix’s connection to Nvidia, through the provision of high bandwidth memory chips for AI chipsets, highlighted the vulnerabilities of companies reliant on Nvidia’s success.
Direct suppliers to Nvidia, like Tokyo Electron and Advantest, also saw their stock prices plummet. Tokyo Electron dropped by 7%, while Advantest shed more than 8%. Japanese investment holding company SoftBank Group, with its stake in chip designer Arm, faced a 6% decline. Taiwan Semiconductor Manufacturing Company (TSMC), known for manufacturing Nvidia’s high-performance graphics processing units, experienced a 4.3% decline. Furthermore, Hon Hai Precision Industry, commonly known as Foxconn, lost 5% due to its strategic partnership with Nvidia. These interconnected relationships underscored the vulnerability of companies closely tied to the fortunes of a single industry player.
The impact of Nvidia’s downturn was so profound that the company wiped out $279 billion in market cap on Tuesday. This massive loss not only affected Nvidia itself but also had widespread repercussions across the semiconductor industry in Asia. The interconnected nature of the semiconductor supply chain magnified the effects of Nvidia’s decline, illustrating the fragility of companies dependent on a few key players for their success.
The sharp decline in Nvidia’s share price had a cascading effect on semiconductor and associated stocks in Asia, highlighting the interconnectedness and vulnerabilities of the industry. This incident serves as a cautionary tale about the risks of overreliance on a single market leader and underscores the importance of diversification and risk management in the semiconductor sector.