A sector-wide pullback hit Asian chip stocks Friday, led by a steep decline in SoftBank, after Nvidia's sharp drop overnight defied its stronger-than-expected earnings and bullish outlook.
SoftBank plunged more than 10% in Tokyo. The Japanese tech conglomerate recently offloaded its Nvidia shares but still controls British semiconductor company Arm, which supplies Nvidia with chip architecture and designs.
SoftBank is also involved in a number of AI ventures that use Nvidia's technology, including the $500 billion Stargate project for data centers in the U.S.
South Korea's SK Hynix fell 8.76%. The memory chip maker is Nvidia's top supplier of high-bandwidth memory used in AI applications. Samsung Electronics, a rival that also supplies Nvidia with memory, fell 5.77%.
Taiwan Semiconductor Manufacturing Company, the world's largest contract chipmaker and manufacturer of Nvidia's chip designs, ended the trading session 4.81% lower.
Taiwan's Hon Hai Precision Industry, also known as Foxconn, which manufactures server racks designed for AI workloads, dipped 4.86%.
The retreat in major Asian semiconductor giants comes after Nvidia fell over 3% in the U.S. on Thursday, despite beating Wall Street expectations in its third-quarter earnings the night before.
The company also provided stronger-than-expected fourth-quarter sales guidance, which analysts said could lift earnings expectations across the sector.
Billy Toh, regional head of retail research at CGS International Securities Singapore, said Nvidia was a victim of a combination of a Bitcoin selloff, the possibility of a delayed Fed rate cut and generally tighter financial conditions.
"Add in the ongoing talk of an AI bubble, which triggers a broader risk-off rotation, and naturally Nvidia becomes one of the first pressure points," he told CNBC.
Smaller chip players in Asia were not spared either. In Tokyo, Renesas Electronics, a key Nvidia supplier, fell 2.65%. Tokyo Electron, which provides essential chipmaking equipment to foundries that manufacture Nvidia's chips, was down 7.14%.
Another Japanese chip equipment maker, Lasertec, was down 5.15%, while Advantest stumbled 12.1%.