Shares of Nvidia (NVDA 1.45%), the semiconductors giant, slipped somewhat again in early trading on the Nasdaq today. The stock is down 2.3% as of 10:55 a.m. ET.
Investors, it seems, may be getting a case of the nerves as Nvidia's fourth-quarter earnings report approaches and new disruptions are reported in the semiconductors supply chain.
As The Wall Street Journal reported this morning, a possible "contamination" of flash memory chips, produced at two fabrication plants in Japan operated by Kioxia Holdings in partnership with Western Digital, has forced a halt in production there. Details on the problem are scarce at present, but the report noted that the stoppage could cut Western Digital's chip production by as much as 13% in Q1 2022.
The Journal noted that this supply crimp will add to concerns from late last year, when Samsung and Micron had their own production interrupted at plants in China because of COVID-19 restrictions.
What does any of this have to do with Nvidia, though? Honestly ... probably not much. I suppose that production of devices that require both memory chips and Nvidia chips to operate could hit a bump, and that this could decrease demand for Nvidia chips until memory supplies are restored. But in the context of a global semiconductor shortage where Nvidia's biggest problem is keeping up with demand, a short-term reduction in demand in one segment of the market probably wouldn't even make a dent in Nvidia's business.
That being said, the repeated reports of supply interruptions do create the potential for a problem, and with Nvidia's Q4 earnings report on the near horizon (earnings are due out Feb. 16), investors may be taking today's Western Digital news as an excuse to lock in some profits from Nvidia's more than 70% run-up in price over the past year.
Expectations for next week's earnings are high, after all. Analysts want to see Nvidia's sales grow 48% and its profits rise 58%. Rather than risk Nvidia "missing" those targets, some investors may simply be stepping to the sidelines today, planning to return to the stock after the danger of a miss has passed.