Earlier Thursday, chip stocks fell across the board after an Nvidia (NVDA) supplier made comments on its earnings call suggesting uncertainty about semiconductor demand this year.
South Korea's SK Hynix (000660.KS) makes memory chips used in Nvidia's GPUs (graphics processing units) - chips used in data centers that power artificial intelligence software. After reporting fourth-quarter earnings that beat analysts' expectations, SK Hynix Finance Chief Woo-Hyun Kim said on the post-earnings conference call about the year ahead: "The outlook for memory demand in 2025 is driven by PC and smartphone OEMs (original equipment manufacturers) as well as the strengthening of protective trade policies and geopolitical risks.”
Nvidia shares fell 2% after the remarks. British chip designer Arm (ARM) fell nearly 6%, and SK Hynix rival Micron (MU) fell nearly 4%.
Meanwhile, Nvidia's rivals Advanced Micro Devices (AMD) and Broadcom (AVGO) both fell about 1%.
The stock fell the previous day after U.S. President Donald Trump released news of a massive artificial intelligence infrastructure project called "Stargate," which is funded by OpenAI, SoftBank (SFTBY), Oracle (ORCL) and Emirates MGX.
Kim's comments highlighted the differences between the markets for semiconductors used in consumer products and those used in artificial intelligence data centers.
As Needham analysts wrote in a note to investors on January 13: “The fortunes of semiconductor companies in different end markets vary greatly in 2024. PCs, smartphones, etc. due to weak end demand and digestion of excess inventory. The fundamentals of semiconductor suppliers in the , industrial and automotive fields are generally under pressure throughout the year.”
“On the other hand, there is a strong demand in the field of artificial intelligence to accelerate the deployment of artificial intelligence infrastructure.”
SK Hynix's Kim also commented on this shift: "As AI memory demand grows, the memory industry is shifting from a commodity market driven by volume and price to a customized market where we focus on high-performance and high-quality products."
Kim added that demand for memory chips used in AI data centers is expected to continue, driven by continued competitive investments by big tech companies to secure advanced AI training and inference capabilities.
Still, Needham analysts warned in a note that the difference between non-AI and AI chip stocks could narrow as they see AI revenue growth starting to decelerate in 2025. Big tech companies, including Google and Microsoft, said in recent quarterly earnings calls that significant spending on artificial intelligence will begin to ramp up slowly in their future.