HONG KONG -- Samsung Electronics and other semiconductor issues came under strong selling pressure in Thursday trading on Asian stock markets following falls in chip stock prices in the U.S.
Investors are increasingly dumping chip-related shares in widespread anticipation of declines in prices of NAND flash memory and other chips, starting in 2018, after a surge in demand for chips applicable to smartphones and data centers peters out, analysts said.
With the Philadelphia Semiconductor Index dropping 4% in the U.S. on Wednesday, Samsung and SK Hynix fell 3.4% and 6.7%, respectively, on the South Korean market on Thursday.
In Tokyo, chip-related stocks, such as Tokyo Electron and Screen Holdings, were also sold actively. Although the Nikkei Stock Average showed moderate fluctuations on rises in financial and other shares, sales of chip shares were followed by more sales.
Prices at which supply and demand for NAND chips are balanced are 30% lower than the current price level, Morgan Stanley said in a report, triggering global sales of chip shares starting Monday.
Other financial services companies also forecast declines in chip stock prices. On Tuesday, for example, SMBC Nikko Securities lowered its investment rating for Horiba, a maker of control instruments for chip production equipment. Horiba stock fell 7% the following day.
"Chances of prices falls in NAND chips before the second half of 2018 are increasing in light of an increase in supply due to their improving yield rate," said Senior Analyst Yoji Watanabe at SMBC Nikko.
As makers of semiconductor production equipment will remain cautious about capital investment before the chip price falls come to a halt, demand for Horiba's machinery is expected to temporarily weaken, according to Watanabe.
The semiconductor industry is commonly expecting that demand for chips applicable to data storage and equipment control will increase due to spreading use of the Internet of Things. Recently, however, semiconductor makers are rapidly expanding their supply capacities.
While Samsung's capital investment in 2017 is projected to soar 80% from the previous year to 46 trillion won ($42.37 billion), nearly 30 trillion won of the sum has been set aside for chip production.
Among investors, expectations are fading that chip-related companies will earn unexpectedly large profits as supply cannot keep up with demand.