Nvidia and OpenAI's $100-billion deal sparks global chip stock rally

A wave of optimism swept through the global semiconductor market on Tuesday, following Nvidia's announcement of a staggering $100 billion investment in OpenAI. This monumental partnership is set to see OpenAI deploy Nvidia systems that will demand between 10 gigawatts of power, translating to an impressive requirement of 4 to 5 million graphics processing units (GPUs), as highlighted by Nvidia CEO Jensen Huang. The news sent shares soaring on Wall Street, creating a ripple effect throughout the semiconductor sector. In Taiwan, Taiwan Semiconductor Manufacturing Co., a key chip supplier for Nvidia, experienced a robust 3.5% increase in its stock price. Meanwhile, SK Hynix in South Korea, which provides memory chips for Nvidia's systems, saw its shares rise by over 2.5%. Samsung, although not currently a supplier of high-bandwidth memory chips to Nvidia, also enjoyed a 1.4% uptick, with investors hopeful that the company will soon receive approval to enter that market. The excitement extended beyond Asia, with the rally making its way to European markets. Early trading saw firms like STMicro, Infineon, and BE Semiconductor climbing in value. However, the day was not without its challenges. ASM International, a semiconductor equipment firm, projected fourth-quarter revenues that would fall short of previous expectations, resulting in a decline in its stock and affecting other equipment manufacturers such as ASML, known for producing essential machinery for advanced semiconductor fabrication. "The growth of the AI ecosystem in Europe presents significant opportunities for equipment manufacturers like ASML and ASMI," remarked Stephane Houri, head of equity research at ODDO BHF, in a statement to clients. He noted that these companies are poised to benefit from the strong demand expected from TSMC, the manufacturer of Nvidia's advanced chips.