DeepSeek's AI Model Shakes Global Tech Markets, Impacting Korean and US Chip Giants

Seoul shares sharply down late Friday morning on tech slide

The logo of SK hynix is seen on its product during The 26th Semiconductor Exhibition 2024 in Seoul, Oct. 23, 2024. Reuters-Yonhap Korean stocks traded sharply lower late Friday morning as tech shares lost ground on the recent shock from the emergence of Chinese artificial intelligence (AI) startup DeepSeek. The benchmark Korea Composite Stock Price Index (KOSPI) had shed 28.88 points, or 1.14 percent, to 2,507.92 as of 11:20 a.m. The KOSPI was closed from Monday to Thursday due to the Lunar New Year holiday. Big-cap tech shares were trading sharply lower, with market behemoth Samsung Electronics down 2.42 percent and its chipmaking rival SK hynix plunging 9.77 percent due to the "DeepSeek shock." Earlier this week, the cost-efficient AI models from China's DeepSeek rattled global stock markets, with some experts arguing the Chinese AI model can compete against those from U.S. tech giants at lower costs. Major U.S. indexes, however, gained ground overnight as investors moved to bag in tech shares following a slide sparked by DeepSeek. In Seoul, tech heavyweights lost ground but information technology (IT) and software companies were bullish. Internet portal operator Naver jumped 5.88 percent, and Kakao, the operator of the country's top mobile messenger, soared 8.11 percent. The two benefited from the recent DeepSeek shock's indication that developing advanced AI models may not require massive computational resources, such as AI chips. Financial shares were also strong, with KB Financial up 2.36 percent, Shinhan Financial up 2.2 percent and Meritz Financial climbing 2.65 percent. The local currency was trading at 1,454.20 won against the U.S. dollar at 11:20 a.m., sharply down 22.9 won from the previous session. (Yonhap)

SK Hynix Shares Slump in Post-Holiday Trading, on DeepSeek Shock

SK Hynix's shares slumped, hit by the shock from Chinese artificial-intelligence startup DeepSeek as stock trading resumed in South Korea after a four-day holiday. Shares of the South Korean memory-chip maker, which suppliers advanced high-bandwidth-memory products to U.S. AI-chip giant Nvidia, fell 9.9% Friday, their sharpest daily drop in nearly half a year. The benchmark Kospi ended 0.8% lower. SK Hynix's tumble mirrored the recent rout of Nvidia shares, while Korean markets were closed. Nvidia shares are down more than 10% so far this week. Worries about competition from cheaper Chinese AI technology, following the release of a new AI chatbot app named DeepSeek earlier this week, triggered a selloff in Nvidia and sent the stock 17% lower on Monday. Nvidia's stock ended 1.2% higher Thursday, paring some of its recent losses. DeepSeek said its AI model R1 was made with relatively unsophisticated chips and at a fraction of the cost needed to build U.S. AI models. U.S. congressional leaders immediately called for tighter export controls on the U.S. AI chip giant following the public unveiling of DeepSeek's AI model. Nvidia chips should be hit with tighter U.S. export controls following revelations the company's technology was used by DeepSeek, the bipartisan leaders of an influential congressional committee said.