A silicon wafer with chips etched into is seen as U.S. Vice President Kamala Harris tours a site where Applied Materials plans to build a research facility, in Sunnyvale, California, U.S., May 22, 2023.
Pool | Reuters
Asian semiconductor and technology stocks resumed their slide Wednesday, tracking overnight losses on Wall Street after a brief rebound in chipmakers lost steam amid lingering concerns over stretched artificial intelligence-related valuations.
Japan’s Softbank Group plunged 10% amid a broader decline in tech names and after efforts to secure at least $6 billion through a margin loan backed by its OpenAI stake hit a snag, according to Bloomberg News. The Japanese tech investment giant is exploring alternative funding options, though it may revisit the loan at a later date.
Japanese chip equipment makers Advantest and Renesas Electronics dropped 3.8% and 3.4%, respectively.
In South Korea, memory chip major SK Hynix dropped over 8%, while Samsung Electronics fell 7.45%. Battery maker Samsung SDI declined more than 5%, while display panel producer LG Display slid nearly 9%.
Taiwan’s chip sector was also under pressure. Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker, fell about 2%, while Apple supplier Hon Hai Precision Industry lost more than 4%.
The declines followed a weaker session on Wall Street, where the tech-heavy Nasdaq Composite fell 0.97% and the S&P 500 slipped 0.26%. A rally in semiconductor stocks that had helped fuel gains a day earlier quickly faded, with the iShares Semiconductor ETF dropping 1%.
AI-related fundraising appears to be diverting money away from existing technology stocks. Upcoming listings such as SpaceX, Anthropic and OpenAI could absorb investor capital that previously flowed into publicly traded tech companies, potentially weighing on the sector.
OpenAI confidentially filed for an initial public offering on Monday, boosting excitement around artificial intelligence-related investments. Meanwhile, SpaceX is scheduled to begin trading on Friday following what is expected to be the largest IPO on record. While some investors see the listing as another catalyst for the AI rally, others worry its $1.75 trillion valuation could signal overheating in the sector.
Andrew Jackson, equity strategist at Ortus Advisors, said the latest volatility in technology shares could prompt investors to rotate into defense names, particularly in Japan, where the government is expected to strengthen its focus on military preparedness.
“With retail punters gnashing their teeth and looking for something new to play with, heavies could snap back into focus after their recent pullback,” Jackson said, citing defense contractors Mitsubishi Heavy Industries, Kawasaki Heavy Industries, IHI Corp. and Japan Steel Works as potential beneficiaries.
