Chip stock carnage seeps into Asia with $11-bn loss

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Tokyo | November 17, 2018 12:18 AM

The chipmaking sector saw another bout of selling in Asia, wiping at least $11.2 billion in market value, as weak forecasts from Nvidia and Applied Materials added to the latest signals that demand for servers, personal computers and mobile is falling.

SoftBank Group, whose Vision Fund owns a stake in Nvidia, and Taiwan Semiconductor Manufacturing were among the biggest drags on the MSCI Asia Pacific Index.

The chipmaking sector saw another bout of selling in Asia, wiping at least $11.2 billion in market value, as weak forecasts from Nvidia and Applied Materials added to the latest signals that demand for servers, personal computers and mobile is falling.

SoftBank Group, whose Vision Fund owns a stake in Nvidia, and Taiwan Semiconductor Manufacturing were among the biggest drags on the MSCI Asia Pacific Index. SoftBank’s results last week included a big boost from the rally in its Nvidia stake. In Japan, declines were broad-based across the sector with equipment makers Tokyo Electron, Advantest and silicon wafer manufacturer Sumco bearing the brunt of the losses.

“In the short term, weaker demand, weaker end-demand is beginning to materialise,” Amir Anvarzadeh, a senior strategist at Asymmetric Advisors in Singapore, said by phone. “Expectations are still too high despite the recent declines. Whether it’s Advantest or whether it’s Disco, or whether it’s Tokyo Electron, those are the equipment guys that will see the impact, and they’re already seeing it.”

Both Nvidia and Applied Materials released weak forecasts. Nvidia was hit by a loss of demand from the collapse of cryptocurrency mining and Applied Materials’ disappointing outlook indicated the chip industry is holding off on expansion plans in the face of a murky outlook for electronics demand. Global chip firms have been whipsawed by worries over prices amid slowing demand. The Philadelphia Semiconductor Index, or SOX, tanked 12% in October for its worst monthly performance since 2010.

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