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Asian technology stocks fell on Monday following concerns over global investment in artificial intelligence and the impact of Chinese start-up DeepSeek.
Japanese chip companies Disco Corp and Nvidia partner Advantest fell 2.6 percent and 8.8 percent, respectively, while top Chinese chip maker SMIC fell 2.9 percent. Overnight trading in the United States indicated that AI bellwether Nvidia was poised to open lower at its close on Friday.
The declines come as markets digested unexpected advances from DeepSeek, which last week released its R1 – a rival to OpenAI’s ChatGPT – casting doubt on Silicon Valley’s heavy investment spending on technology. AI and the sustainability of the United States’ technical advantage in artificial intelligence.
“DeepSeek R1 is AI’s Sputnik moment,” venture capitalist Marc Andreessen wrote on the social networking site the placing of the first satellite into orbit.
DeepSeek reached the top of the App Store download charts in the United States on Monday. The small startup claimed to build competitive models on a shoestring budget, leading industry insiders to question whether it was necessary to invest tens of billions of dollars in building chip clusters AI for training large language models.
“It seems that the reality is starting to sink in: China has not been sitting idly by, even though these tariffs and investment restrictions on technology companies have been put in place,” said Mitul Kotecha, Head of Emerging Markets Macro and FX at Barclays.
“The fact that they were able to do high-end technology surprised a lot of people. . . This is what seems to be causing the change in sentiment today.
Hong Kong’s Hang Seng index was up 0.9% as of early Monday afternoon, led higher by Chinese technology companies listed in the territory, including Tencent and Alibaba. Chinese AI company iFlytek rose 1.75 percent.
Tokyo traders said Monday’s selling was focused on stocks such as Tokyo Electron and Fujikura, which have surged in recent months due to their heavy exposure to AI investments.
“It’s DeepSeek, for sure,” a Tokyo-based fund manager said of the sudden drop in Japanese tech stocks, adding that the market was readjusting to the idea that spending on computer hardware for AI – a theme that has benefited some Japanese companies – could be a problem. much lower than current estimates.
Furukawa Electric, which makes cables for data centers, has posted particularly strong gains since November, but its shares fell more than 11.3 percent on Monday, making it the biggest percentage loser in the benchmark index Nikkei 225 Average.
A broker at one of Japan’s biggest brokerages said it was difficult to say how long the pain would last and whether it was the start of a selloff.
Tokyo’s markets are expected to follow those in the United States when the latter opens later today, the source said, but added that some clients were using the DeepSeek news as an excuse to lock in profits on stocks that had performed well. performed since the beginning of the year. year.
Others noted that the selloff in big Japanese tech stocks was triggering a broader rout in Japanese stocks. The Topix rose on Monday as the market reacted to the Bank of Japan’s 0.25 percent interest rate hike last week.
Shares of Japan’s three biggest banks – MUFG, SMFG and Mizuho – all rose about 1 percent as higher interest rates are expected to translate into higher domestic profits.
