A silicon wafer with embedded chips is seen as US Vice President Kamala Harris visits the site where Applied Materials plans to build a research facility, in Sunnyvale, California, US, May 22, 2023.
Pool | Reuters
Asian semiconductor and technology stocks resumed their slide on Wednesday, trailing overnight losses on Wall Street after a temporary rally in chipmakers lost steam amid widespread concerns over valuations related to artificial intelligence.
Japanese Softbank Group fell 10% amid a broader decline in tech names and after efforts to raise at least $6 billion in loans backed by OpenAI, according to Bloomberg News. The Japanese technology investment giant is exploring other funding options, although it may revisit the loan later.
Japanese chip makers Advantest again Renesas Electronics decreased by 3.8% and 3.4%, respectively.
In South Korea, memory chip major SK Hynix fell more than 8%, while Samsung Electronics fell 7.45%. Battery maker Samsung SDI fell more than 5%, while display panel maker LG Display fell nearly 9%.
Taiwan’s chip sector was also under pressure. Taiwan Semiconductor Manufacturing Co., the world’s largest contract manufacturer, fell nearly 2%, while Apple’s supplier Hon Hai Precision Industry lost more than 4%.
The decline followed a weak session on Wall Street, with the tech-heavy Nasdaq Composite down 0.97% and the S&P 500 down 0.26%. A rally in semiconductor stocks that helped fuel gains the previous day quickly faded, with the iShares Semiconductor ETF down 1%.
AI-related fundraising appears to be taking money away from existing technology stocks. Upcoming listings from the likes of SpaceX, Anthropic and OpenAI could absorb investor money that has been flowing into publicly traded technology companies, which could weigh on the sector.
OpenAI filed for its first public offering on Monday, raising excitement about artificial intelligence-related investments. Meanwhile, SpaceX is scheduled to begin trading on Friday following what is expected to be the largest IPO in history. While some investors see the listing as another boost to the AI rally, others are concerned that its $1.75 trillion valuation could indicate overheating in the sector.
Andrew Jackson, equity strategist at Ortus Advisors, said the recent volatility in technology stocks could prompt investors to turn to defensive stocks, particularly in Japan, where the government is expected to tighten its focus on war preparations.
“As retailers gnash their teeth looking for something new to play with, the pressure may return after the recent setback,” Jackson said, citing defense contractors Mitsubishi Heavy Industries, Kawasaki Heavy Industries, IHI Corp. and Japan Steel Works as potential beneficiaries.
