Samsung Electronics’ fourth-generation high-bandwidth memory, or HBM3 chips, have been cleared by Nvidia for use in its processors for the first time, three people briefed on the matter said.
SeongJoon Cho | Bloomberg | Getty Images
Technology and chip-related shares in Asia fell on Thursday after Nvidia reported its second-quarter results overnight, amid broader declines in the region’s key markets.
Losses were heaviest at companies with direct ties to the US tech giant, such as South Korean chipmakers SK Hynix and Samsung Electronics.
SK Hynix, which makes high-bandwidth memory chips — used in artificial intelligence applications — for Nvidia, fell as much as 6.74 percent.
Samsung Electronics, the top-weighted stock on the South Korean benchmark stock market index, Kospi, fell as much as 3.8%.
While the extent of Samsung’s supplier relationship with Nvidia is not fully known, the company is is expected to make HBM chips for some Nvidia productsaccording to Reuters.
Other direct suppliers of Nvidia such as e.g Taiwan Semiconductor Manufacturing Company and Hon Hai Precision Industry — known internationally as Foxconn — saw losses of as much as 2.8% and 2.96%, respectively.
The spillover extended to other tech stocks, albeit to a lesser extent. Japanese stocks related to semiconductors like Renesas, Advantest and Tokyo Electron fell as much as 3.2%, 3.6% and 3.49% respectively.
Separately, Hong Kong-listed Chinese chipmakers fell, despite being largely unrelated to Nvidia’s value chain. SMIC, which is partly state-owned, lost about 1.4 percent, while Hua Hong Semiconductor fell 1.66 percent.
Runaway train slowing down
While Nvidia beat quarterly revenue and earnings per share estimates, the drop in shares could have been caused by fears that the company may not be able to deliver explosive growth in the current quarter, according to Luke Rahbari, its CEO Equity Armor Investments on CNBC. “Squawk Box Asia.”
Rahbari said the results are “really good,” but also noted that “For so many quarters, Nvidia has blown out analyst expectations… People [are] perhaps thinking the runaway train is slowing down a bit.’
He remains bullish on the company, noting “no company in the world, in my estimation, has the position that Nvidia has in its industry, such a dominant position.”
Nvidia’s gross margin, however, fell to 75.1% from 78.4% in the prior period, while the “mid-range 70%” annual gross margin forecast was below analysts’ estimate of 76, 4%, according to StreetAccount.
Speaking on CNBC’s “Squawk Box Asia,” Mark Lushcini, chief investment strategist at financial advisor Janney Montgomery Scott, called the drop in Nvidia shares a “rounding error,” citing how much Nvidia has rallied this year. On a year-to-date basis, shares are up about 150%.
He noted, “the company is growing fast, but the pace of growth has been slowing for 4 quarters. For a company trading at 40-50 times forward earnings, this is a high-demand hurdle to overcome against expectations.”
