Semiconductor stocks led another leg of the technology sell-off across Asia and Europe on Wednesday, with SK Hynix closing 9.61% lower after missing analysts' estimates. Several memory and chip-equipment names posted double-digit declines, while Chinese internet stocks listed in Hong Kong traded higher. Aberdeen Investments called the sell-off an opportunity rather than a deterioration in fundamentals, and UBS chief executive Sergio Ermotti said a correction was to be expected.
Technology stocks in Asia and Europe extended their sell-off on Wednesday, and semiconductor names led the declines after another weak session in the United States. In South Korea, SK Hynix closed 9.61% lower after dropping over 15%. The chip maker missed analysts' estimates despite posting record quarterly profit and revenue.
Memory and equipment names post double-digit falls
Samsung Electronics lost more than 5%, while LG Innotek fell 10.89% and Seoul Semiconductor dropped 8.89%. Japanese chip names also declined, with memory manufacturer Kioxia down 13.85% and Tokyo Electron off 10.59%. SoftBank Group, a major AI investment proxy through its stake in Arm, lost 6.95%.
European chip stocks were also lower: ASML fell 3.85%, ASM International lost 9.26% and BESI dropped 3.54%. Taiwan's TSMC, the world's largest contract chip manufacturer, was 3.51% lower. In mainland China, the tech-heavy ChiNext 300 index gained 1.43%, while the Hang Seng China Semiconductor Chips Index fell 2.5%.
US chip stocks fell overnight
The declines in Asia came on the heels of another weak session for U.S. semiconductor stocks overnight. Nvidia sank at the open but closed the session flat, while Intel dropped nearly 6% and AMD lost 8%. Memory names fell further, as Micron and Seagate lost more than 8%, Western Digital sank nearly 7% and Sandisk shed 14%.
Chinese internet stocks listed in Hong Kong bucked the broader regional weakness. Tencent and Meituan rose 4.29% and 2.05% respectively as of 3.26a.m. ET, and Alibaba, Baidu and Kuaishou all traded higher.
Analysts tie the drop to deleveraging and AI froth
Kieron Poon, investment director of Asian equities at Aberdeen Investments, pointed in a Tuesday note to the ongoing deleveraging process in Korea and softer sentiment towards global technology stocks. Aberdeen sees the sell-off as an opportunity rather than a deterioration in fundamentals, and Poon said the recent volatility has not changed the firm's long-term positive view.
David Riedel, founder and president of Riedel Research Group, told CNBC's "Squawk Box Asia" on Wednesday that the recent pullback in AI-related chip stocks reflects investors giving back a little bit of the froth in the AI market. Concerns over AI financing and rising Chinese competition have weighed on sentiment, but Riedel said the market is healthy and that memory chipmakers will be fine.
Separately, UBS chief executive Sergio Ermotti told CNBC that a correction was to be expected given the pace and scope of increasing market caps and concentration over the last three-to-four months, and said AI and its supporting infrastructure will continue to remain a big factor in markets.
Sources: CNBC, CNBC International
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