Asia tech stocks fall as DeepSeek sows doubts about AI spending

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Asian tech stocks fell on Monday on concerns about global artificial intelligence investment and the impact of Chinese startup Deepseek.

Japanese chipmakers Disco Corp and Smemantest, an NVIDIA partner, fell 2.6 percent and 8.8 percent, respectively, while top Chinese chipmaker Smic fell 2.9 percent in overnight trading in the US. that AI bellwether Nvidia is set to unveil on Friday.

The decline comes as markets digest Deepseek’s Unexpected Advanceswhich last week released its R1 — Openai’s CHATGPT CHATGPT CHATGPT AI model — casts doubt on the sustainability of Silicon Valley’s Hefty AI Capex spending and artificial intelligence.

“Deepseek R1 is AI’s Sputnik moment,” wrote venture capital investor Marc Andreessen on the social media site X, comparing the launch to the Soviet Union’s orbit of vice.

On Monday, Deepseek hit the top of the App Store download charts in the U.S. The small startup claims to be building competitive models on a bootstrapped budget, prompting industry insiders to question whether it needs pour in tens of billions of dollars For large language model training in building AI chip clusters.

“There seems to be a bit of a reality that China has not been sitting idly by as these tariffs on tech companies have been put in place,” said Mitul Kotcha, head of M Macros and FX.

“The fact that they can achieve high-end technology has caught a lot of people by surprise. A series. This seems to be what’s driving the change in sentiment today.”

Hong Kong’s Hang Seng Index rose 0.9 percent in early trade on Monday, led by gains in the area by Chinese tech companies including Tencent and Alibaba. China AI firm iflytek rose 1.75 percent.

Traders in Tokyo noted that Monday’s sell-off was tightly focused on stocks such as Tokyo Electron and Fujikura, which have risen in recent months due to high exposure to AI investments.

“It’s certainly deep,” said one fund manager based on a sudden drop in Japanese tech stocks well below current estimates.

Furukawa Electric, which makes wire cables for data centers, saw particularly sharp gains on Monday, up more than 11.3 percent, making it the biggest percentage loser in the Nikkei 225 average.

A dealer 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 more selling.

Tokyo markets were expected to follow us closely when the latter opened during the day, the person said, but they added that some customers have been good since the start of the year.

Others pointed to a sell-off in big Japanese tech stocks sparking a broader rout in Japanese stocks.Topix rose on Monday as the market rebounded from last week’s 0.25 percent gain rising interest rates by the Bank of Japan.

Shares in Japan’s three biggest banks — Muff, SMFG and Mizuho — all rose around 1 percent, beating expectations that rising interest rates would create stronger domestic earnings.