Asian technology stocks, particularly chipmakers, saw a downturn as investors reacted to a SemiAnalysis report indicating a delay in Nvidia's next-generation Kyber AI rack system until 2028. This delay, attributed to manufacturing snags and Taiwan production bottlenecks, has raised concerns about the sustainability of the AI-driven market rally. SK Hynix Inc. dropped 3.8%, South Korea's tech-heavy Kospi index lost 1%, and Japan's Nikkei 225 Stock Average fell 0.4%. The Philadelphia Semiconductor Index, which had seen an 88% gain last quarter, fell 5% on Thursday, bringing its two-session decline to 12%.
Despite the broader tech slump, Nvidia's server assembly partner, Hon Hai Precision Industry Co. (Foxconn), reported a stronger-than-expected 40% jump in quarterly sales, crediting growing AI demand. Hon Hai, which also assembles AI servers for Nvidia, saw its shares rise more than 6% in Taipei. Investors are now shifting focus to the upcoming earnings season to assess if technology companies can translate their substantial investments in AI into tangible profits.
Market analysts, such as Kazuhiro Sasaki of Phillip Securities Japan, suggest that fund managers are likely to sell off high-performing AI stocks to secure profits and rotate into underperforming or value stocks like autos, machinery, and healthcare. This sector rotation, also noted by Fabien Yip of IG International, is seen as a healthy development to improve market breadth after a narrow rally. The market remains cautious ahead of major chipmakers' earnings releases, with the potential for a rebound if results are better than expected, given that many shares have corrected to more reasonable levels.
