Asia report: Stocks fall as Nvidia scandal hits chip sector

(Sharecast News) - Stocks across Asia fell on Thursday as a headline-grabbing scandal and potential leadership changes at chip giant Nvidia raised fresh concerns about the sustainability of the AI boom.

The tech-heavy Nikkei 225 and KOSPI indices fell 0.7% and 0.6%, respectively, while the Hang Seng dropped 1.3% and the Shanghai Composite fell 0.7%. Taiwan's TAIEX dropped 2.6% due to a heavy tumble from TSMC.

Stocks in the chip and AI-adjacent sectors were under heavy selling pressure across Asia. Notable fallers included SK Hynix declined, SK Square, LG Energy Solution, Alibaba, Tencent, Advantest and Ibiden.

Nvidia shares were sharply lower in pre-market trade on Wall Street amid reports the US company is looking to oust chief executive Jensen Huang following the revelation of two separate extramarital relationships, including one with an alleged Chinese spy.

"The main question for investors today is whether or not Jensen Huang will leave the role of CEO at Nvidia after a crucial board meeting that was held to discuss his fate late on Wednesday. There has been no official announcement on the outcome so far on Thursday. A leadership scandal at one of the world's biggest companies is enough to bring the tech stock rally to a halt," said Kathleen Brooks, research director at XTB.

"Nvidia has acted like an unofficial and unregulated central bank to the AI industry. This is mostly down to Huang's leadership. If he goes, this could bring an end to the circular financing that has been a controversial part of the AI expansion in recent months."

In economic data, Japanese factory gate inflation rose from 6.8% to 7.1% in October, well ahead of the 6.5% consensus estimate.