Global technology hardware stocks deepened on Thursday as Asian chip makers chased losses on Wall Street as concerns about further Federal Reserve interest rate hikes and funding for artificial intelligence investments weighed on prices.
South Korean semiconductor giant SK Hynix plunged more than 10%, while rival Samsung Electronics also fell 7.1%. Other Korean chip-related stocks were also under pressure. LG Innotek fell 8.1%, Seoul Semiconductor fell 7.7%, and Samsung SDI fell 6.8%.
Major technology investor in Japan Softbank Group It fell 7.9%. Semiconductor inspection equipment manufacturer Advantest Semiconductor manufacturing equipment suppliers fell 6.9% Tokyo Electron We lost 5.4%. Renesas Electronics It decreased by 5.4%.
The decline comes as investors grow concerned that rising borrowing costs could squeeze out the huge capital investments needed to build out AI infrastructure, putting pressure on technology companies that have benefited from the AI investment boom.
The chief executives of Broadcom and Intel warned on Monday that financing could be a major headwind to the AI boom, with Broadcom’s Hock Tan saying financing could be a bigger challenge to AI expansion than shortages of chips or power.
The decline followed volatile trading on Wall Street on Wednesday, with tech stocks leading market-wide losses as better-than-expected U.S. inflation data heightened concerns that the Federal Reserve could raise interest rates further.
The tech-heavy Nasdaq Composite Index fell 1.88% to close at 26,692.87, and the S&P 500 Index fell 1.11% to close at 7,718.94. The Dow Jones Industrial Average fell 0.09%.
Dan Ives, a technology analyst at Yorkville Ives, said the recent decline in AI stocks reflects growing concerns about the cost of financing large infrastructure projects as U.S. Treasury yields exceed 5%, but added that underlying demand for AI computing power remains strong.
“Rising yields will increase the cost of financing these constructions, and while investors are right to focus on balance sheets and contract structures, interest rates are a funding issue, not a demand issue,” Ives said in a note.
Ives said the pullback is a buying opportunity, adding that the AI infrastructure boom is still in its early stages despite growing concerns about the cost of capital.
“It’s not the interest rate signals that change our view, it’s the demand signals,” he said, citing possible reductions in hyperscalers’ capital spending plans, contract cancellations and falling GPU rental prices as red flags.
