Shares of SK Hynix Inc. and other Asian tech hardware stocks tumbled on Thursday, as worries over Federal Reserve interest rate hikes and the cost of AI infrastructure investments weighed on the market. SK Hynix plunged over 10%, while Samsung Electronics fell 7.1%. Other South Korean chip-related stocks also suffered, with LG Innotek sinking 8.1%, Seoul Semiconductor shedding 7.7%, and Samsung SDI declining 6.8%.
In Japan, SoftBank Group dropped 7.9%, and semiconductor-related firms like Advantest, Tokyo Electron, and Renesas Electronics also saw declines. Investors fear that higher borrowing costs could strain the massive capital spending needed to build AI infrastructure, potentially slowing the growth of tech companies that have thrived on AI investments.
Chief executives of Broadcom and Intel warned earlier this week that financing could become a significant obstacle to the AI boom. Broadcom's Hock Tan highlighted that funding challenges might be a bigger hurdle than supply issues. The sell-off followed a sharp decline on Wall Street after hotter-than-expected U.S. inflation data raised concerns about further Fed rate hikes.
The tech-heavy Nasdaq Composite fell 1.88%, while the S&P 500 lost 1.11%. Dan Ives, a tech analyst at Yorkville Ives, noted that the sell-off reflects concerns over financing costs but emphasized that demand for AI computing power remains strong. He suggested that the current pullback could present a buying opportunity, as the AI infrastructure boom is still in its early stages.