Samsung Electronics’ fourth-generation high-bandwidth memory chips, or HBM3, have been licensed by Nvidia for use in its processors for the first time, three people familiar with the matter said.
SeongJoon Cho | Bloomberg | Getty Images
Technology and chip stocks in Asia fell on Thursday after U.S. chip darling Nvidia reported second-quarter results overnight, amid broader declines in key markets across the region.
Losses were most pronounced at companies with direct ties to the U.S. tech giant, such as South Korean chipmakers SK Hynix and Samsung Electronics.
SK Hynix, which makes high-bandwidth memory chips (used in AI applications) for Nvidia, saw its shares fall as much as 6.74%.
Samsung Electronics, the most heavily weighted stock in South Korea’s benchmark index stock index, Kospi, fell by up to 3.8%.
While the extent of Samsung’s supplier relationship with Nvidia is not fully known, the company is expected to manufacture HBM chips for some Nvidia products, according to Reuters.
Other direct suppliers of Nvidia such as Semiconductor manufacturing company in Taiwan And Hon Hai Precision Industry — known internationally as Foxconn — posted losses of up to 2.8% and 2.96%, respectively.
The fallout also spread to other technology stocks, although to a lesser extent. Japanese semiconductor stocks such as Renesas, Advantest And Tokyo Electron fell by 3.2%, 3.6% and 3.49% respectively.
Separately, Hong Kong-listed Chinese chipmakers fell, although they are largely unrelated to Nvidia’s value chain. SMIC, which is partly state-owned, fell about 1.4%, while Hua Hong Semiconductor fell 1.66%.
A runaway train slows down
While Nvidia beat estimates for quarterly revenue and earnings per share, the stock’s slide may have been triggered by concerns that the company won’t be able to deliver explosive growth in the current quarter, Equity Armor Investments CEO Luke Rahbari told CNBC’s “Squawk Box Asia.”
Rahbari said the results were “really good,” but also noted that “for many quarters, Nvidia has exceeded analyst expectations… People may be thinking that the bandwagon is slowing down a little bit.”
He remains optimistic about the company, however, noting that “no company in the world, in my opinion, has the position that Nvidia has in its industry, such a dominant position.”
Nvidia’s gross margin, however, slipped to 75.1% from 78.4% in the prior period, while its annual gross margin forecast of “mid-70% range” was below analysts’ estimate of 76.4%, according to StreetAccount.
Speaking to CNBC’s “Squawk Box Asia,” Mark Lushcini, chief investment strategist at financial advisory firm Janney Montgomery Scott, called the decline in Nvidia shares a “rounding error,” citing Nvidia’s rise in value this year. Shares are up about 150% year-to-date.
He noted that “the company is growing rapidly, but the pace of growth has been slowing for 4 quarters now. For a company trading on 40-50x forward earnings, that’s a high demand hurdle to overcome relative to expectations.”
