The Asian semiconductor market experienced a downturn on Wednesday morning, following the significant drop in Nvidia’s share price in the U.S. Nvidia, a leading chipmaker, saw its stock plummet by more than 9% during regular trading hours in the U.S. This decline had a ripple effect on semiconductor stocks across the region, as investors reacted to the sell-off on Wall Street.
The sell-off was exacerbated by economic data released on Tuesday, which reignited worries about the state of the U.S. economy. These concerns were further amplified by a report from Bloomberg that revealed Nvidia had received a subpoena from the Department of Justice as part of an antitrust investigation. This development added to the uncertainty surrounding Nvidia’s future prospects and its potential legal challenges.
The impact of Nvidia’s share price plunge extended beyond just the company itself. In South Korea, semiconductor-related firms such as SK Hynix and Samsung Electronics felt the repercussions. SK Hynix, a memory chip maker that supplies high bandwidth memory chips to Nvidia for use in AI chipsets, experienced a sharp decline of over 6%. Similarly, Samsung Electronics saw its shares slide by 2.6%, contributing to a 2.5% drop in the wider Kospi index. The smaller Kosdaq index also took a hit, falling by 3%.
Other companies in Nvidia’s supply chain were also adversely affected by the news. Suppliers like Tokyo Electron and Advantest, which provide essential components and testing equipment to Nvidia, saw their stocks plummet by 7% and 8% respectively. SoftBank Group, a Japanese investment holding company with a stake in chip designer Arm, experienced a 6% decline. Additionally, Taiwan Semiconductor Manufacturing Company (TSMC), which manufactures Nvidia’s high-performance graphics processing units, witnessed a drop of 4.3%. These disruptions in the supply chain could have long-term consequences for both Nvidia and its suppliers.
The market downturn also impacted companies with strategic partnerships with Nvidia. Taiwan’s Hon Hai Precision Industry, known internationally as Foxconn, lost 5% in response to the news. The company has a close relationship with Nvidia, and any challenges faced by the chipmaker could potentially affect Foxconn’s business operations. The overall uncertainty in the market resulted in Nvidia wiping out $279 billion in market cap on Tuesday, signaling a turbulent period for the semiconductor industry.
The sharp decline in Nvidia’s share price has sent shockwaves through the Asian semiconductor market, highlighting the interconnectedness of global supply chains and the vulnerability of companies to external shocks. As investors remain cautious about the economic outlook, it is essential for companies in the semiconductor sector to reassess their risk management strategies and prepare for potential challenges ahead.