Nvidia has received approval to use Samsung Electronics Co.’s fourth-generation high-bandwidth memory, or HBM3, chips in its processors for the first time, three people familiar with the matter said.
Seung-Joon Cho | Bloomberg | Getty Images
Technology and chip stocks fell in Asia on Thursday after U.S. chipmaker Nvidia reported second-quarter results overnight, amid a broader slide in major markets in the region.
The most visible losses were in companies with direct ties to the US tech giant, such as South Korean chipmaker SK Hynix and Samsung Electronics.
Shares of SK Hynix, which makes high-bandwidth memory chips — used in artificial intelligence applications — for Nvidia, fell 6.74%.
Samsung Electronics, the top-weighted stock in South Korea's benchmark index Stock index, KOSPI, It decreased by 3.8%.
While the full extent of Samsung's supplier relationship with Nvidia is unknown, the company is expected to manufacture HBM chips for some Nvidia products, according to Reuters.
Other direct suppliers to Nvidia include: Taiwan Semiconductor Manufacturing Company and Hon Hai Precision Industry Co., Ltd. – known internationally as Foxconn – saw losses of 2.8% and 2.96%, respectively.
The impact also spread to other technology stocks, albeit to a lesser extent. Japanese semiconductor-related stocks such as Renesas, Adventist and tokyo electron Crude oil prices fell by 3.2%, 3.6% and 3.49%, respectively.
Separately, shares of Chinese chipmakers listed on the Hong Kong Stock Exchange fell, even though they are largely unrelated to Nvidia's value chain. thick, Shares of Huahong Semiconductor, which is partly state-owned, fell about 1.4%, while Huahong Semiconductor fell 1.66%.
Runaway train slows down
While Nvidia beat estimates on quarterly revenue and earnings per share, the stock's decline may be due to concerns that the company may not be able to deliver massive growth in the current quarter, Equity Armor Investments CEO Luke Rahbri told CNBC's “Squawk Box Asia.”
Rahbari said the results were “really good,” but he also noted that “Nvidia has exceeded analyst expectations in several quarters… and people probably think the runaway train is slowing down a little bit.”
He remains bullish on the company, saying, “There is no company in the world, in my estimation, that has the position that Nvidia has in its industry, such a dominant position.”
However, Nvidia's gross profit margin fell to 75.1% from 78.4% in the prior period, while the annual gross profit margin forecast in the “mid-70% range” was below analysts' estimates of 76.4%, according to StreetAccount.
Speaking on CNBC’s “Squawk Box Asia,” Mark Lucchini, chief investment strategist at financial advisory firm Janney Montgomery Scott, called the drop in Nvidia shares a “rounding error,” noting how much Nvidia has risen this year. On a year-to-date basis, shares are up about 150%.
“The company is growing fast, but the pace of growth has been slowing for four quarters now. For a company trading at 40 to 50 times forward earnings, that’s a big demand hurdle to overcome compared to expectations,” he said.
