Asian AI Hardware Stocks Tumble 11% as Financing Fears Hit Chip Supply Chain

A Goldman Sachs Group Inc. basket of regional Asian AI hardware stocks tumbled 11% last week—its steepest decline since mid-July—following an eight-session rout in US semiconductor shares that wiped roughly 16% off the sector's benchmark in the longest such losing streak since 2008. The selloff hit top-performing component suppliers despite an upbeat revenue outlook from Taiwan Semiconductor Manufacturing Co., with electronic component maker Samsung Electro-Mechanics Co. plunging 23%, Unimicron Technology Corp. falling 14%, and printed-circuit board material maker Nan Ya Plastics Corp. dropping 12% from a record high. Investor scrutiny of AI infrastructure borrowing intensified as oil surged to $110 a barrel for the first time since May and bonds of neocloud provider CoreWeave Inc. sank to levels signaling distress, alongside a 25% weekly drop in CoreWeave shares after founders unloaded $3.3B in stock. Eight of the 10 best-performing companies in the MSCI Asia-Pacific Index this year are component makers that each gained at least 236%, while TSMC, Samsung Electronics Co., and SK Hynix Inc. together account for nearly a third of the MSCI Asia ex-Japan Index. Gartner Inc. has warned that more than $3.5T of AI infrastructure spending could be at risk of impairment by 2030 if investment outpaces revenue, though Bloomberg notes there is little evidence so far that financing strains have translated into weaker hardware orders. "Financing costs are like gravity for the AI boom. Rising borrowing costs could make infrastructure projects harder to finance and delay spending. Even a delay could trigger a reset in Asian suppliers' earnings expectations and valuations." — Jian Shi Cortesi, Fund Manager at GAM Investment Management.