The chipmaking sector saw another bout of selling in Asia, wiping at least US$8.4 billion in market value, as weak forecasts from Nvidia Corp and Applied Materials Inc on Thursday added to the latest signals that demand for servers, personal computers and mobile devices is falling.
“In the short term, weaker demand, weaker end-demand is beginning to materialize,” said Amir Anvarzadeh, a senior strategist at Asymmetric Advisors in Singapore. “Expectations are still too high despite the recent declines.”
Applied Materials, the world’s largest maker of equipment used in semiconductor production, on Thursday projected first-quarter revenue that trailed estimates.
Photo: Tyrone Siu, Reuters
Chief executive officer Gary Dickerson said on an earnings call that weaker demand in the server, PC and mobile markets are making his customers less willing to invest in new production.
The stock fell as much as 9.5 percent in late trading.
Nvidia, the leader in chips for computer graphics, tumbled 17 percent after projecting sales for this quarter that also fell short of analysts’ estimates.
Disappearing cryptocurrency orders resulted in higher inventory levels, while falling prices failed to spark demand, chief executive officer Jensen Huang (黃仁勳) said.
The chipmaker funk has been hastened by a trade spat between the US and China, which threatens demand for a broad range of chip-powered devices. China is the biggest consumer of semiconductors and home to a crucial part of the world’s electronics supply chain.
Also weighing on the industry are signs that the years-long boom in demand for data center servers, and the semiconductors that run them, is slowing.
Alphabet Inc, Amazon.com Inc and Facebook Inc have spent lavishly on data centers to handle the growing amounts of data shared online, and analysts fret that the spree is unlikely to last.
After surging about 30 percent or more in four out of the past five years, the Philadelphia Stock Exchange Semiconductor Index has lost almost 10 percent of its value since the beginning of last month and is now down for the year. The index reached a record in March.
Thursday’s results dragged on the rest of the industry. An exchange-traded fund tracking the Philadelphia semiconductor index declined 2.7 percent in extended trading. Advanced Micro Devices Inc tumbled as much as 7.4 percent, while semiconductor equipment manufacturers Lam Research Corp and KLA-Tencor Corp slipped more than 3 percent.
“Shares in Nvidia and other US semiconductor manufacturers plunged in after-hours trading due to concerns about their earnings, which triggered a sell-off in the tech sector,” IwaiCosmo Securities Co broker Toshikazu Horiuchi said.
“Nintendo, which uses Nvidia’s processors, fell sharply on speculation that Nvidia’s forecast would indicate a slowdown in Nintendo Switch sales,” he said.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to