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Asian technology stocks fell on Monday after global investment in artificial intelligence and the impact of Chinese startup Deepseek.
Japanese chip companies Disco Corp and Advantest, an NVIDIA partner, fell 2.9 percent and 8.1 percent, respectively, while China’s top chipmaker SMIC fell 2.5 percent. U.S. overnight trading said Ai Bellwether Nvidia opened on Friday closing.
The declines come as the markets have digested them unexpected advances from DeepseekThe one that released its R1 last week – a rival to the OpenAI model Chatgpt Generative AI – casts doubt on Silicon Valley’s hefty AI capex spending and the sustainability of the U.S. technical advantage in artificial intelligence.
“Deepseek R1 is AI’s Sputnik moment,” venture capital investor Marc Andreessen wrote on the social media site X, comparing the release to the Soviet Union’s wake-up call to put the first satellite into orbit.
Deepseek released the download charts in the US on Monday. The small startup has claimed to be building competitive models on a bootstrapped budget, leading industry insiders to question whether this is necessary Pour tens of billions of dollars Build AI chip clusters for large-scale language model training.
“It seems like there’s a bit of reality that China hasn’t been sitting idle even though these tariffs and investment restrictions have been put in place for tech companies,” said Mitul Kotecha, head of EM macro and FX at Barclays.
“The fact that they can achieve high-end tech has surprised a lot of people. . . This seems to be what is driving the shift in feeling today. “
Hong Kong’s Hang Seng index rose 1.1 percent by midday on Monday, led higher by Chinese tech companies listed in the territory such as Tencent and Alibaba. China AI company Iflytek rose 2.4 percent.
Traders in Tokyo said Monday’s selling was narrowly focused on stocks such as Tokyo Electron and Fujikura, which have risen in recent months on their high exposure to AI investments.
“It’s certainly deepseeking,” a Tokyo-based fund manager said of the sudden decline in Japanese tech stocks, adding that the market was latching on to the idea that hardware spending on AI was a theme that benefited certain Japanese companies -could be a much lower than current estimates.
Furukawa Electric, which makes wire cable for data centers, has had particularly strong gains since November, but its shares fell more than 9 percent on Monday, making it the biggest percentage loser on the benchmark Nikkei 225 average.
A trader at one of Japan’s largest brokerages said it was hard to say how long the pain would last and whether it was the start of a larger sell-off.
Tokyo’s markets were expected to follow those in the U.S. when it opened later in the day, the person said, but they added that some clients were using Deepseek News as an excuse to save profits on stocks that have performed well since the start were pictured year.
Others noted that the selloff in major Japanese tech stocks triggered a broader rout in Japanese equities. The Topix rose on Monday morning as the market reacted to last week’s 0.25 percent gain Rise in interest rates from the Bank of Japan.
Shares in Japan’s three largest banks – MUFG, SMFG and Mizuho – all rose on expectations that interest rate hikes will lead to stronger domestic profits.
