Asian chip stocks faced a tough day recently, mainly due to a significant drop in SoftBank’s share price, which fell by over 10% in Tokyo. This decline happened after Nvidia’s shares dipped despite the company reporting better-than-expected earnings. SoftBank, which once held a stake in Nvidia, has sold off its shares but still owns British semiconductor firm Arm, a key player in chip design.
SoftBank’s troubles add to a trend in the semiconductor sector. Chipmakers like South Korea’s SK Hynix, which is Nvidia’s top supplier for AI memory, saw a drop of 8.76%. Samsung Electronics, another supplier, also fell by 5.77%. Taiwan Semiconductor Manufacturing Company (TSMC), the largest contract chipmaker globally, dropped by 4.81%. Foxconn, known for making server racks for AI workloads, decreased by 4.86%.
Billy Toh, a retail research head at CGS International Securities Singapore, points out that Nvidia is pressured by several factors. A sell-off of Bitcoin, the potential for delayed interest rate cuts by the Federal Reserve, and a tightening of financial conditions all contribute. Additionally, growing conversations about an AI bubble have made investors more cautious, putting Nvidia under scrutiny.
This downturn isn’t limited to big players; smaller chip companies are feeling the heat too. Renesas Electronics, a significant supplier to Nvidia, fell by 2.65%, while Tokyo Electron, which provides essential manufacturing equipment, dropped by 7.14%.
Overall, the shaky performance of Nvidia has rippled through the semiconductor industry, impacting companies both large and small. As the market navigates these uncertainties, only time will tell how these shifts will play out, especially amidst ongoing discussions about the sustainability of the tech industry’s growth.
For more insights, you can refer to CNBC’s analysis.
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