00:00Taiwan's stock market rebounded on Tuesday after taking one of its steepest drops in
00:04recent history.
00:06The benchmark index, the TAIX, closed up 2.76 percent after falling nearly 3.5 percent
00:12on Monday.
00:14Other Asian indexes also bounced back, with Korea's Kospi up about 8 percent.
00:19Most of the volatility has centered around AI and tech stocks, which took a big tumble
00:24in U.S. markets last Friday, especially in the tech-heavy Nasdaq, which saw its biggest
00:28single-day drop in history.
00:32This volatility in the markets has raised questions about how dependent they have become
00:36on a handful of big tech companies.
00:39To understand how the AI surge is reshaping stock indexes around the world, our reporter
00:44Lili Lamatina spoke to Rolf Balk from the Futurum Group.
00:48Recent trading saw a severe tech-led sell-off.
00:51What triggered the pullback, and are we seeing signs of a sustained recovery?
00:55What we saw on Monday in Asia was very much a follow-on of what we saw in the U
01:01.S. on Friday.
01:03So there was a broad sell-off on Friday, but in particular in the memory sector, which is
01:11a more cyclical and volatile sector.
01:14And also in companies exposed to the AI build-out, such as in Asia, such as TSMC, for instance.
01:22So the sell-off was very much centered around the AI trade, and that triggered by the material
01:32pullback of the names exposed to that trade on Monday.
01:36Now, on Tuesday, we've seen a material recovery, as the market realized that likely concerns
01:41were overblown, and that spending is actually more sustainable than feared.
01:48And today we've seen a major recovery, in particular in memory names, that have also seen the biggest
01:55decline in share price on Monday.
01:57How is the AI boom reshaping not just tech stocks, but which countries and sectors lead
02:02global markets?
02:03We've seen a few U.S. companies, specifically Envida, AMD, and Broadcom, very much lead in
02:13the design of the chips that are used in AI data centers.
02:20So GPUs and ASICs, which are application-specific chips or chips specifically developed for AI workloads.
02:28Now, those three companies have been the major beneficiaries of AI, but all of those chips
02:35are manufactured in Asia.
02:38The logic components of the chips are primarily manufactured in Taiwan, whereas the memory components
02:45of those AI chips are primarily manufactured in Korea.
02:49So we have seen those two countries specifically benefit massively from the AI build-outs, and you
02:58can see that in the performance of the indexes of those respective countries.
03:03When a handful of tech stocks are driving most gains, how stable is the broader market
03:07underneath?
03:09There are a few linchpins, I would say, in the AI build-outs.
03:14NVIDIA is one of them.
03:16Samsung, SK Hynix, DSMC.
03:18So these companies are essential.
03:21And if one of those companies fails in executing on their roadmap.
03:28So in NVIDIA, they are designing chips on an annual cadence.
03:35TSMC is bringing out new logic nodes every two to three years.
03:40The same goes for memory nodes for the Korean manufacturers.
03:44If those companies misexecute and do not deliver on that cadence, then the entire sector, as
03:50a result, will be impacted.
03:53So that does mean that there's a number of failure points here.
03:57But at the same time, these are very mature companies that have been on a cadence of designing
04:04new chips, bringing out new nodes for decades.
04:08And while risk continues to persist, I do think that there's no signs at the moment of
04:17any type of concern around their ability to execute and continue to execute.
04:24That was Rolf Bock from the Futrum Group.
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