Asian markets: Doubts about the future of Nvidia boss Huang are slowing down South Korea's stock market

The stock markets in Japan and Taiwan are rising strongly, but South Korea is lagging behind. Nvidia boss Huang's affair is dampening the mood. There is a lot at stake for Samsung and SK Hynix.

Tokyo: Investors in Japan are following the trend on Wall Street. Photo: Eugene Hoshiko/AP/dpa

Tokyo. Nvidia boss Jensen Huang's affair dampened the recovery rally in chip stocks on South Korea's stock exchange on Monday. While Tokyo and Taipei on Monday fully followed the positive trend in US chip values ​​from Friday, South Korea's Kospi index started in the red against the Asian trend. In the first hours of trading, the leading index worked its way up to 1.6 percent at 5,140 points. But it lagged significantly behind the neighboring exchanges.

Japan's Nikkei 225 index rose 3.4 percent to 59,411 points by the lunch break, while the broader Topix also rose 3.4 percent to 3,834 points.

The Taiwanese Taiex, which is dominated by the world's largest chip contract manufacturer TSMC, even shot up by 6.5 percent to 42,297 points in the first 90 minutes of trading.

The markets that are less dependent on chip values ​​developed inconsistently. Singapore's Straits Times Index lost just over two percent, Hong Kong's Hangseng was up slightly, while the Shanghai Composite Index was 0.5 percent above Friday's closing price in early trading.

The reason for the reluctance in Seoul is the growing doubts about Huang's future. “Investors are currently processing new uncertainties surrounding Nvidia,” wrote the South Korean news agency Yonhap. The reason: Nvidia's board of directors launched an independent investigation on Sunday (US time). It is intended to clarify allegations that the CEO was targeted by a suspected Chinese spy.

Huang's daughter cancels trip to Korea at the last minute

In South Korea, the crisis of trust is already being felt immediately. Huang's daughter Madison Huang, senior director of product marketing at the chip company, unexpectedly canceled a trip to important dates in South Korea on Saturday. Among other things, she was supposed to meet ministers and take part in an Nvidia event.

She was represented by other Nvidia managers. But the response was apparently great even among investors. Nvidia is one of the main customers of the world's two largest memory chip manufacturers Samsung Electronics and SK Hynix, which supply the US company with memory chips for artificial intelligence (AI). Nvidia is also an important partner in the South Korean AI strategy.

Samsung and SK Hynix shares therefore took a while to track the recovery in US chip values. The Philadelphia Semiconductor Index (SOX) jumped 4.2 percent on Friday. At lunchtime, Samsung Electronics was up 2.5 percent, SK Hynix was up 4.2 percent.

Concern about new export controls

In addition, investors are wondering whether the investigation into the affair will ultimately lead to stricter controls on chip exports to other Asian countries. The Huang scandal has shown how China could circumvent US export restrictions on Nvidia's most powerful AI chips.

For a good ten days, the revelations and reactions have been spreading ever wider. At the end of October, US media reported that US secret services believed the CEO was a target of Alice Huang, an executive at the Singapore-based data center operator Megaspeed.

The manager, who is not related to Huang, is suspected of working for the Chinese secret service. Her company has also purchased Nvidia chips worth at least $4.8 billion. It is suspected that Chinese AI providers trained their models in Singapore - or that Nvidia chips were even redirected to China.

The weakest link

Huang admitted to an extramarital affair in an email to staff. However, he says he didn't know about the woman's connections. The South Korean economist Kim Dae-ho, director of the Global Economic Research Institute, counters that ignorance “can hardly be considered an acquittal.”

Nvidia is no longer an ordinary semiconductor company, “but a national security asset,” said Kim in a column for the Korean medium Global Economic News. “Who his boss has a drink with and what he talks about is not a private matter, but belongs in the area of ​​information warfare.” The verification of conversation partners is therefore a matter for the boss.

In the race for technological supremacy, information warfare is being waged not just in research laboratories, but also in the bars of Taipei and dinners in Seoul, Kim says. His conclusion: “The weakest link in the company that produces the most expensive chips in the world was not the chips, but the people.”

Tokyo and Taipei unimpressed

However, the Huang case has left no visible traces in other Asian markets. In Taiwan, the investigation into the affair is being followed closely - after all, Huang met the Chinese manager in Taipei. But investors were not deterred by this.

Likewise in Japan, where the AI ​​boom is primarily driving the numerous important suppliers to the chip industry. The shares of the chip system manufacturer Tokyo Electron rose by 6.5 percent, those of the test equipment manufacturer Advantest by 5.8 percent.

But the trend didn't help all chip and AI stocks. The technology investor Softbank, which is a major investor in the AI ​​provider OpenAI and has close relationships with Nvidia, was trading 1.7 percent below its Friday value after the lunch break. The company will present its eagerly awaited half-year results tomorrow. Because Softbank is extremely dependent on AI values, which have fallen significantly since their peak in the summer.