Nvidia shares slipped in and out of positive territory Tuesday and could face pressure over the coming weeks as supply-chain issues, some of which are tied to the political crisis in South Korea, affect Blackwell sales forecasts.
Nvidia (NVDA), which is counting on several billions of dollars of Blackwell sales over the the group’s fiscal fourth quarter ending in January, relies heavily on South Korea-based SK Hynix for memory chips that are crucial to its performance.
Earlier this fall in fact, Nvidia CEO Jensen Huang asked SK Hynix to speed up the supply of its newest high-bandwidth memory chips, known as HBM4, as it ramped production of Blackwell graphics-processing units into next year.
SK Hynix is also planning to invest $6.8 billion in a new chip plant based in Yongin, around 25 miles southeast of Seoul, that the group said would be “the foundation for SK Hynix’s mid- to long-term growth.”
South Korea’s semiconductor exports in November rose 30.8% from the year-earlier month to $12.5 billion. The figure marked the fourth consecutive record total, even as overall exports slowed 1.4% to $56.35 billion.
South Korea declares martial law
South Korea, however, is now in the throes of an unprecedented political crisis following the declaration of martial law by President Yoon Suk Yeol earlier Tuesday.
Yoon Suk Yeol said the move was justified by opposition Democratic Party moves to impeach him. He said the declaration would enable him to “eradicate pro-North Korean forces and protect the constitutional democratic order.”
South Korea hasn’t had a martial law declaration since the country’s infamous coup d’etat in 1979.
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Reports suggest soldiers have banned lawmakers from entering South Korea’s National Assembly, while curbs on the media and the right to protest are expected over the coming days.
That is likely to hinder production at both SK Hynix and Samsung Electronics, which is reportedly looking to supply Nvidia with HBM3 memory chips in a major challenge to its domestic rival.
Nvidia, meanwhile, told investors at the UBS Global Technology and AI Conference in New York on Tuesday that broader supply constraints tied to its Blackwell ramp would continue into the coming year.
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“What we are seeing right now is demand continues to be fueled by the size of models and the complexity of inferencing,” finance chief Colette Kress told the event.
“What we see in terms of Blackwell this quarter is also a supply constraint that is going to take us well into our next fiscal year (and) for several quarters,” she added.
Wall Street analysts expect Blackwell sales to add between $3 billion and $5 billion to Nvidia’s fourth-quarter revenue, before those figures accelerate to around $62 billion in 2025 and $97 billion the following year.
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Nvidia shares were last marked 0.4% higher, changing hands at $139.13.
South Korea’s won was marked at the lowest level against the U.S. dollar in at least three years following the Yoon declaration.
Other South Korea-focused assets, such as the iShares MSCI South Korea ETF (EWY) and the Franklin FTSE Korea ETF (FLKR) were marked 2.7% and 2.3% lower respectively at last check Dec. 3.
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