The semiconductor and associated stocks in Asia took a hit on Wednesday morning, following the steep plunge in Nvidia’s share price in the U.S. The U.S. chipmaker Nvidia witnessed a significant drop of over 9% in regular trading, causing a ripple effect in the semiconductor sector. This decline in Nvidia’s stock price led to a broader sell-off in semiconductor stocks on Wall Street, generating concerns about the overall health of the U.S. economy.
The repercussions of Nvidia’s share price plunge were felt across Asia, particularly in countries like South Korea and Japan. South Korea’s memory chip maker SK Hynix and conglomerate Samsung Electronics were among the companies impacted. Samsung shares slid by 2.6%, while SK Hynix experienced a sharp decline of over 6%, dragging down the wider Kospi index by 2.5%. The small-cap Kosdaq also fell by 3%, reflecting the negative sentiment in the semiconductor market.
Due to Nvidia’s ties with Asian semiconductor companies, the supply chain disruptions were evident. SK Hynix, a key supplier of high bandwidth memory chips to Nvidia for AI chipsets, experienced a significant drop in its stock price. Other direct suppliers to Nvidia, like Tokyo Electron and Advantest, also faced declines of 7% and 8% respectively. The Japanese investment holding company SoftBank Group, which owns a stake in chip designer Arm, saw its shares fall by 6%. Additionally, Taiwan Semiconductor Manufacturing Company (TSMC), known for manufacturing Nvidia’s high-performance graphics processing units, witnessed a decline of 4.3%.
The impact of Nvidia’s share price plunge extended to companies with strategic partnerships with the U.S. chipmaker. Hon Hai Precision Industry, also known as Foxconn, lost 5% on the Taiwan stock market. Foxconn has a crucial partnership with Nvidia, indicating potential risks associated with disruptions in supply chains and market volatility.
Nvidia’s market cap suffered a massive blow in the U.S. market, wiping out $279 billion. This steep decline not only affected Nvidia shareholders but also had a cascading effect on the global semiconductor industry, highlighting the interconnected nature of the market and the vulnerability of companies to external shocks.
The repercussions of Nvidia’s share price plunge on Asia’s semiconductor stocks underscore the interconnectedness of the global market and the susceptibility of companies to external factors. It serves as a reminder of the importance of diversification and risk management in navigating the volatile nature of the semiconductor industry.