The semiconductor and associated stocks in Asia experienced a decline on Wednesday morning, closely following the steep drop in Nvidia’s share price in the U.S. The U.S. chipmaker Nvidia saw a significant decrease of over 9% in regular trading, causing semiconductor stocks to trend lower amidst a sell-off on Wall Street. This downturn was triggered by economic data released on Tuesday which raised concerns about the health of the U.S. economy.
The repercussions of Nvidia’s share price plunge were felt in South Korea, particularly impacting companies like memory chip maker SK Hynix and conglomerate Samsung Electronics. Following Nvidia’s decline, Samsung shares fell by 2.6% and SK Hynix experienced a more substantial drop of over 6%, consequently dragging down the wider Kospi index by 2.5%. Additionally, the small-cap Kosdaq plummeted by 3%.
Impact on Nvidia’s Suppliers
SK Hynix, a key supplier of high bandwidth memory chips to Nvidia for use in AI chipsets, was not the only company affected by the situation. Other direct suppliers such as Tokyo Electron witnessed a 7% decrease in their stock prices, while semiconductor testing equipment supplier Advantest saw a decline of over 8%. Japanese investment holding company SoftBank Group, holding a stake in chip designer Arm, also experienced a decline of 6%. Contract chip manufacturer Taiwan Semiconductor Manufacturing Company (TSMC), responsible for producing Nvidia’s high-performance graphics processing units, observed a 4.3% decrease in its stock value.
The impact of Nvidia’s share price plunge extended beyond South Korea, reaching companies in Taiwan as well. Taiwan’s Hon Hai Precision Industry, widely known as Foxconn, lost 5% as a result of its strategic partnership with Nvidia. The repercussions were significant, with Nvidia wiping out a staggering $279 billion in market cap in the U.S. on Tuesday.
The ripple effect of Nvidia’s share price decline reverberated across Asia, affecting semiconductor companies, related suppliers, and even investment holding firms. The interconnected nature of the global technology industry highlights how developments in one part of the world can have far-reaching consequences in regional markets. As investors continue to monitor the situation, the volatility and interconnectedness of the semiconductor industry remain prominent factors influencing the stability of the market.