AI Model DeepSeek Sparks Selloff in Japanese Tech Stocks
The release of Chinese AI model DeepSeek has sent shockwaves through the Japanese tech industry, with shares of semiconductor-related companies plummeting on Monday. The ripple effect has extended to power generation stocks, as investors worry about the impact of decreasing AI costs on electricity demand.
Chip Equipment Makers Take a Hit
Advantest Corp., a supplier of testers to Nvidia Corp., led the decline, dropping as much as 11% and heading for a two-day decline of 18%, its worst performance since August. Disco Corp., another chip equipment maker, slid 9.5%, while SoftBank Group Corp. retreated 6.7%, erasing its gains from last week.
Analysts Weigh In
“The fact that the cost of AI is decreasing is a negative for AI-related stocks, and it’s an irreversible trend,” said Ryoutarou Sawada, an analyst at Tokai Tokyo Intelligence Laboratory. “The cost of semiconductors, which are involved in creating generative AI, will also fall, which is bad news for Japanese makers of chip equipment.”
Power Generation Stocks Feel the Pinch
The impact of DeepSeek has also affected power generation stocks, as investors worry about the slowdown in AI-related investment. Shares of Kyushu Electric Power Co., Tokyo Electric Power Co., and Kansai Electric Power Co. fell over 2%. “It’s only natural that selling will spread to the periphery of the AI sector, like power generation stocks,” said Kiyoshi Ishigane, chief fund manager at Mitsubishi UFJ Asset Management.
Long-Term Opportunities
However, analysts believe that Japanese companies involved in making AI could benefit from the cost-saving technology of DeepSeek in the long run. “If they take advantage of the Chinese model’s technology to develop a similar Japanese-language model, it could be a game-changer,” said Pelham Smithers, an analyst at UK firm Pelham Smithers Associates.
Market Reaction
The Nikkei 225 index was down 0.6% as of 11:30 a.m. in Tokyo, with Fujikura Ltd., Furukawa Electric Co., Advantest, Mitsubishi Heavy, and SoftBank among the worst performers.
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