Japan’s semiconductor stocks have continued to decline for a second consecutive day, driven by Chinese startup DeepSeek in artificial intelligence. This development raises questions about the United States’ dominance in the tech industry.
Key players in Japan’s chip-related sector faced significant losses, with semiconductor testing equipment supplier Advantest dropping over 10%, Tokyo Electron falling by 3.6%, and Renesas Electronics decreasing by 2.29% on Tuesday.
Additionally, SoftBank Group, which owns chip designer Arm, saw its shares slide by 5.26%. Companies related to data centers also experienced a downturn, with wire and cable manufacturers Furukawa and Fujikura declining by 8.22% and 8.1%, respectively.
DeepSeek made headlines after releasing a free, open-source large language model in late December, reportedly developed in just two months with a budget under $6 million. Recently, the company introduced R1, a reasoning model that outperformed OpenAI’s latest version.
Andrew Jackson, head of equity strategy at ORTUS Advisors, expressed concern over the ongoing market trends, stating that more losses could follow. He noted that a critical issue is whether the U.S. will reconsider its restrictive approach to chip and semiconductor equipment regulations.
DeepSeek’s innovative focus on reasoning abilities sets it apart from its competitors, as it aims to improve response accuracy by creating a “chain of thought” before delivering final answers. Analysts from Citi highlighted that DeepSeek poses a challenge to the narrative of the U.S.
Nvidia, a major chip manufacturer, recently faced a staggering loss of nearly $600 billion in market value, marking the largest single-day drop for a company in the U.S. market.
Despite this, a shift towards more defensive stocks helped mitigate some losses. Other international chip firms, including ASML and Micron, also reported declines, indicating a broader impact on the semiconductor market.
