Shares in Japanese tech companies fell amid a global market slump triggered by China’s low-cost artificial intelligence (AI) model DeepSeek, with investors questioning the exorbitant valuation and dominance of global AI leaders, according to Reuters.
Nvidia shares pulled US stocks down, falling 17% on Monday and losing $593 billion of the chip maker’s market value. Shares of chip testing equipment maker Advantest, a supplier to Nvidia, lost 10% on Tuesday after falling nearly 9% on Monday.
Shares of chip equipment maker Tokyo Electron and technology startup investor SoftBank Group fell 5%. That started with Chinese startup DeepSeek’s free AI assistant last week, which OpenAI CEO Sam Altman called “an impressive model.”
We will obviously deliver much better models and also it’s legit invigorating to have a new competitor!
The launch and growing popularity of DeepSeek also prompted investors to dump shares of technology companies around the world, including in Tokyo and Silicon Valley.
In the US, Broadcom ended trading down 17.4%, whereas Microsoft-backed ChatGPT fell 2.1% and Alphabet, Google’s parent company, closed down 4.2%. The Philadelphia Semiconductor Index also fell 9.2%, its deepest percentage drop since March 2020.
The controlling shareholder of the Hangzhou startup behind DeepSeek is Liang Wenfeng, co-founder of quantitative hedge fund High-Flyer. Researchers wrote that its DeepSeek-V3 model, released on 10 January, used lower-performance Nvidia H800 chips for training and cost less than $6 million.
The quality and cost-effectiveness of DeepSeek’s models triggered a warning from US President Donald Trump, who called it “a wakeup call for our industries.” Japan’s Minister of Digital Technology Masaaki Taira stated that the release of DeepSeek overturned the conventional belief that Chinese AI was years behind.
It’s been said that Chinese generative AI might be about five years behind, but that turned out to be wrong and it seems to be on a fairly good track.
