Asian chip shares tumble on Nvidia earnings, tariff fears

A POOR market reception of Nvidia’s earnings and the spectre of additional US tariffs have knocked down Asian chip stocks, dragging Japan’s tech-heavy Nikkei average down to its lowest level since September.

A Bloomberg gauge of 25 Japanese chip-related stocks sank as much as 4.5 per cent, the biggest intraday fall since September, led by 12 per cent fall in Disco Corp. Advantest Corp plunged as much as 10 per cent while Tokyo Electron lost 5.5 per cent at one point.

In South Korea, SK Hynix and Samsung Electronics tumbled 4.8 per cent and 2.3 per cent respectively, while Taiwan’s market was closed for a holiday. In China, Nvidia supplier Foxconn Industrial Internet drops as much as 4.3 per cent while Hong Kong-listed Sunny Optical shed 5 per cent.

Nvidia, the chipmaker at the centre of an artificial intelligence (AI) spending boom, sank 8.5 per cent in New York after warning that gross profit margins would be tighter than anticipated. Its quarterly sales will be about US$43 billion, slightly above analysts’ estimates, it said. While the results were released on Thursday (Feb 27) morning in Asia, investors in the region have not had the chance to react to Nvidia’s full price action until Friday.

“Right now everyone is worried about investments in AI. Nvidia’s earnings were in line with expectations but fell short of dispelling those concerns,” said Mitsuhiro Shibata, senior strategist at Daiwa Securities.

Adding to the gloom was concern about a global trade war after US President Donald Trump said 25 per cent tariffs on Canada and Mexico are on track to go into place next week. He also said he would impose an additional 10 per cent tax on Chinese imports.

“Compared with one-month ago, hopes that he will eventually compromise have receded,” said Yoshiki Nagata, senior portfolio manager at Meiji Yasuda Asset Management.

Japan’s Nikkei fell more than 3 per cent to the lowest level since Sep 19. BLOOMBERG

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