(Bloomberg) — Shares of Japanese semiconductor-related companies, including Nvidia Corp. tester supplier Advantest Corp. and chip equipment maker Disco Corp., extended Monday’s drop after the release of Chinese AI model DeepSeek prompted a selloff in US tech stocks.
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Advantest dropped as much as 11%, heading for a two-day loss of 18%, the most since the August market rout. Disco slid 9.5%, while SoftBank Group Corp. retreated 6.7%. The latter has erased its gains from last week, when it rallied on news the company was involved in a $100 billion investment plan for AI infrastructure in the US.
Other chip-related firms including Lasertec Corp., Screen Holdings Co. and Tokyo Electron Ltd. all fell over 4% at one point. In the US, Nvidia lost almost $600 billion in market capitalization on investor concern about competition from DeepSeek.
“It begs the question of how many AI chips US BigTech will sell in future,” and that’s weighing on the outlook for Japanese chip equipment makers, Pelham Smithers, an analyst at UK firm Pelham Smithers Associates, wrote in a research note.
DeepSeek’s latest large-language model, released last week, is widely seen as a low-cost rival to the US’s OpenAI and Meta Platforms Inc. It was the most downloaded free iPhone app in the US as of Tuesday morning Japan time.
The impact of DeepSeek “is going to force a pause in some commercial AI infrastructure plans” and “should cause a slowdown” in AI-related investment, Smithers wrote.
However, the DeepSeek-led rout may offer some long-term upsides for Japanese companies involved in making AI, if they take advantage of the Chinese model’s “cost-saving” technology to develop a similar Japanese-language model, he added.
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