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Asian technology stocks fell on Monday on concerns about global investment in artificial intelligence and the impact of Chinese startup DeepSeek.
Japanese chip company Disco Corp and Nvidia partner Advantest fell 2.9% and 8.1% respectively, while China’s leading chipmaker Semiconductor Manufacturing International Corp fell 2.5%. U.S. overnight trading suggests artificial intelligence leader Nvidia is poised to open lower at Friday’s close.
The decline comes as the market digests unexpected developments from DeepSeek, which last week released R1 – a competitor to OpenAI’s ChatGPT generative AI model – that casts doubt on Silicon Valley’s huge AI capital spending and the U.S. Doubts arise about the sustainability of technological superiority.
“DeepSeek R1 is artificial intelligence’s Sputnik moment,” venture capitalist Marc Andreessen wrote on social media site
DeepSeek topped the U.S. App Store download list on Monday. The small startup claims to be bootstrapping its budget to build competitive models, prompting industry insiders to question whether tens of billions of dollars are necessary to build clusters of artificial intelligence chips for training large language models.
“There seems to be a bit of reality that while these tariffs and investment restrictions on technology companies are in place, China is not sitting idle,” said Mitul Kotecha, head of emerging markets macro and foreign exchange at Barclays.
“The fact that they were able to implement high-end technology surprised a lot of people. . . . That seems to be what’s driving the shift in sentiment today.
As of midday on Monday, Hong Kong’s Hang Seng Index was up 1.1%, led by Chinese technology companies listed in Hong Kong such as Tencent and Alibaba. Shares of Chinese artificial intelligence company iFlytek rose 2.4%.
Tokyo traders said Monday’s sell-off focused on stocks such as Tokyo Electron and Fujikura, which have surged in recent months due to their heavy focus on investments in artificial intelligence.
“Definitely DeepSeek,” one fund manager in Tokyo said of the sudden drop in Japanese tech stocks. He added that the market was recalibrating hardware spending for artificial intelligence – a theme that had benefited some Japanese companies. — may become a new trend.
Furukawa Electric, which makes cables for data centers, has seen particularly strong gains since November, but its shares plunged more than 9% on Monday, making it the biggest loser on the benchmark Nikkei 225 index.
A trader at one of Japan’s largest brokerages said it was difficult to say how long the pain would last or whether it was the start of a larger sell-off.
Tokyo markets are expected to follow U.S. markets, which open later in the day, the people said, but they added that some clients used the DeepSeek news as an excuse to lock in profits on stocks that have performed well since 2019.
Others pointed to the selloff in Japan’s big tech stocks as triggering a broader rout in Japanese stocks. The Topix rose on Monday morning as markets reacted to the Bank of Japan’s 0.25% interest rate hike last week.
Shares in Japan’s three largest banks – Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Financial Group (SMFG) and Mizuho – all rose about 2% on expectations that higher interest rates will lead to stronger domestic profits. .
