Japan technology companies are worried about Chinese startup DeepSeek, which introduced its new open AI model — DeepSeek V3 — before the New Year, which is called a competitor to OpenAI’s ChatGPT. What, according to market experts, is troubling Asian tech manufacturers and what is the reason for the company’s shares falling?
Japan technology companies are worried about Chinese startup DeepSeek, which introduced its new open AI model — DeepSeek V3 — before the New Year, which is called a competitor to OpenAI’s ChatGPT. What, according to market experts, is troubling Asian tech manufacturers and what is the reason for the company’s shares falling?
As of Monday morning, Nasdaq Composite futures were down 1,8%, while S&P 500 futures were down 0,9%. Japan’s Nikkei (.N225) fell 0,3%, reversing an earlier rally. New Zealand’s benchmark stock index (.NZ50) fell 0,6%, and Singapore’s Straits Times Index (.STI) lost 0,2%.
Meanwhile, Hong Kong’s Hang Seng (.HSI) rose 0,9%, while mainland blue chips (.CSI300) added 0,2%, even after data showed a surprise decline in manufacturing this month.
«Japan chip stocks are selling off sharply on DeepSeek concerns, and we’re seeing a shift from growth names to value,» CNBC wrote, citing an emailed response from Andrew Jackson, head of equity strategy at ORTUS Advisors. He attributed the stock’s decline to rising spending on technology infrastructure and data center organization.
Veteran investor Jesper Coll noted that everyone knows that Japanese chipmakers are potentially world-class, but stressed that their ability to produce at scale is limited. «And it’s fair to worry that their speed of execution may lag behind China’s newfound will to win,» Coll said in a commentary for CNBC.
IG strategist Yip Jun Rong wrote that DeepSeek «raised the specter of disruption in the tech landscape, its emergence suggesting that China could continue to make headway in the AI race despite U.S. restrictions.» Rong added that it «seems to raise some concerns about U.S. dominance in tech» and puts «the high valuations of tech companies under scrutiny.»
«With such a cheap model, there can now be a lot of new products and experiences trying to win the hearts and minds of the world’s population,» said Chamath Palihapitiya, a Canadian-American venture capitalist and CEO of Social Capital, who sees volatility in the stock market as capital markets try to revalue the value of companies from the Magnificent 7.
To sum up, Jun Rong Yep also stated that while it remains to be seen whether DeepSeek will prove to be a viable and cheaper alternative in the long term, initial concerns center on whether the pricing power of American tech giants is threatened and whether their huge spending on AI needs to be reevaluated.
