Nvidia's Historic $279 Billion Plunge Rattles Global Chip Market

Wednesday 04 September 2024 - 13:15

Global semiconductor stocks experienced a significant downturn on Wednesday, following a steep decline in Nvidia’s share price in the U.S. overnight. The plunge in Nvidia’s stock value, amounting to a staggering $279 billion, marked the largest one-day market capitalization drop for a U.S. stock in history.

In the U.S., chipmaker Nvidia saw its shares plummet by more than 9% during regular trading hours, leading a broader sell-off in the semiconductor sector amid renewed economic concerns. The downturn was exacerbated by a report from Bloomberg that Nvidia had received a subpoena from the Department of Justice as part of an antitrust investigation. This news sent Nvidia’s shares sliding an additional 2% in post-market trading.

The previous record for the largest one-day market capitalization drop was held by Facebook-parent Meta, which suffered a $232 billion fall in value in February 2022.

Nvidia’s extensive value chain includes key players in South Korea, such as memory chip maker SK Hynix and conglomerate Samsung Electronics. Samsung shares closed 3.45% lower, while SK Hynix, which supplies high bandwidth memory chips to Nvidia, slid by 8%.

In Japan, Tokyo Electron dropped by 8.5%, and semiconductor testing equipment supplier Advantest shed nearly 8%. Japanese investment holding company SoftBank Group, which owns a stake in chip designer Arm, fell by 7.7%.

Contract chip manufacturer Taiwan Semiconductor Manufacturing Company (TSMC) declined more than 5%. TSMC manufactures Nvidia’s high-performance graphics processing units, which power large language models—machine learning programs that can recognize and generate text.

Taiwan’s Hon Hai Precision Industry, known internationally as Foxconn, lost nearly 3%. Foxconn has a strategic partnership with Nvidia.

The selling pressure in Asia extended to European semiconductor stocks. Shares of ASML, which makes critical equipment to manufacture advanced chips, fell by 5% in early trade. Other European names such as ASMI, Be Semiconductor, and Infineon also saw declines.

The ripple effect of Nvidia’s historic plunge underscores the interconnected nature of the global semiconductor industry. As investors grapple with economic uncertainties and regulatory scrutiny, the sector faces significant headwinds that could impact the broader tech market.