Chip Stocks Fall Amid Semiconductor Demand Uncertainty
Earnings Call Comments Raise Concerns
Chip stocks across the board experienced declines on Thursday after SK Hynix, a prominent memory chip supplier for Nvidia, expressed uncertainty regarding the semiconductor demand outlook for 2023.
SK Hynix Executive's Commentary
In its earnings call, SK Hynix CFO Woo-Hyun Kim stated that "2025's memory demand outlook is clouded" due to inventory adjustments from PC and smartphone manufacturers, geopolitical risks, and protective trade policies.
Impact on Chip Stocks
Following these comments, Nvidia dropped 2%, Arm (ARM) declined 6%, and SK Hynix competitor Micron (MU) fell 4%. Advanced Micro Devices (AMD) and Broadcom (AVGO) also experienced declines of around 1%.
Divergence in Semiconductor Markets
Kim's commentary highlighted the differentiation between semiconductor demand for consumer products and data center-based AI infrastructure. Memory chips used in AI data centers are expected to continue experiencing strong demand, driven by Big Tech investments in advanced AI capabilities.
Narrowing Gap in Non-AI and AI Chip Stocks
However, Needham analysts anticipate a potential narrowing of the gap between non-AI and AI chip stocks, as AI revenue growth is projected to decelerate in 2025. Large tech companies have indicated a slowdown in AI spending in recent earnings calls.