Asian Chip Stocks Retreat, Following Nvidia Lower — Update

By Kwanwoo Jun

Asian semiconductor stocks broadly retreated on Thursday, tracking U.S. artificial-intelligence chip giant Nvidia's tumble overnight.

Shares of South Korea's SK Hynix, a main supplier of high-bandwidth-memory products for Nvidia's AI accelerators, slumped as much as 6.7%, underperforming the local benchmark Kospi's 0.8% fall. Larger memory-chip maker Samsung Electronics lost as much as 3.8%.

Semiconductor-related stocks in Asian markets elsewhere were also weighed by the decline in Nvidia's stock overnight.

In Tokyo, shares of Nidec, which makes liquid-cooling modules for generative AI servers, slipped 3.5%.

Taiwan Semiconductor Manufacturing Co., the world's largest chip foundry and the biggest contract manufacturer for Nvidia, closed 2.2% lower.

Chinese chip giants Semiconductor Manufacturing International Corp. and Hua Hong Semiconductor, which have low exposure to advanced AI chips, both fell in early Hong Kong trading before erasing losses and turning higher.

Meanwhile, European semiconductor stocks were largely unfazed in early morning trading. Shares of Dutch semiconductor-equipment maker ASML Holding and smaller peer ASM International were up more than 1%. Elsewhere in the continent, shares of German chip maker Infineon Technologies rose 0.5% in Frankfurt, while Apple supplier STMicroelectronics gained nearly 1.9%.

The broad decline in Asian semiconductor stocks came as Nvidia's shares dropped 6.9% in after-hours trading after finishing 2.1% lower at $125.61 Wednesday on the tech-heavy Nasdaq despite strong quarterly results. Nvidia's sales and earnings both more than doubled in its latest quarter.

Analysts attributed Nvidia's surprise post-earnings retreat to incredibly high market expectations for the U.S. AI juggernaut.

"Nvidia's earnings were good, but not enough to surpass optimistic expectations," Alvin T. Tan, head of Asia foreign-exchange strategy at RBC Capital Markets, said in a commentary.

"Judging from the initial market reaction in extended trading hours, the loftiest expectations were clearly not met," Peter Garnry, head of equity strategy at Saxo Bank, said in a note about Nvidia's earnings.

Garnry also noted "some nervousness" around Nvidia's new Blackwell AI chips, with some design flaws that postponed their rollouts, though the issue wasn't derailing the entire production.

Seoul-based BNK Securities analyst Sanghyun Lee, in a recent note, said he expects SK Hynix to face softer-than-expected HBM demand temporarily due to Nvidia's plan to cancel its shipments of B100 and B200 Blackwell units and replace them with new B200A units.

--Ronnie Harui and Sherry Qin contributed to this article.

Write to Kwanwoo Jun at kwanwoo.jun@wsj.com

(END) Dow Jones Newswires

August 29, 2024 04:35 ET (08:35 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.