I would be tempted to create a temp table, load your delimited file into the temp table and then do a single update using a JOIN between your existing table and the temp table.
Something like this (not tested so please excuse any typos)
<?php
$link = mysql_connect('localhost', 'root', '');
If (!$link)
{
die ('Could not connect: ' . mysql_error());
}
@mysql_select_db('testarea') or die ('Unable to select database');
echo "Connection succeeded, starting processing..... <br />\n";
$result = mysql_query("CREATE TEMPORARY TABLE tmpStock
(sku varchar(50),
asin varchar(50),
price double(16,2),
quantity int(11),
KEY sku (sku )
) ENGINE=MyISAM DEFAULT CHARSET=latin1 ");
$result = mysql_query("LOAD DATA INFILE 'C:/wamp/www/TestArea/qtyme.txt' INTO TABLE tmpStock FIELDS TERMINATED BY '\t' ENCLOSED BY '\"' LINES TERMINATED BY '\n'")or die ('Error: '.mysql_error ());
$result = mysql_query("UPDATE products a INNER JOIN tmpStock b ON a.products_sku = b.sku SET a.products_quantity = b.quantity")or die ('Error: '.mysql_error ());
?>
PS - probably should use mysqli, but I have stuck with mysql as that is what you are already using.