(Bloomberg) — Shares of Japanese semiconductor-related corporations including Advantest Corp. and Disco Corp. prolonged Monday’s drop after the discharge of Chinese AI model DeepSeek prompted a selloff in US tech stocks.
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Advantest, which supplies testers to Nvidia Corp., dropped as much as 11%, heading for a two-day decline of 18%, probably the most since a market rout in August. Chip equipment maker 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 corporate plans to commit $19 billion to an investment plan for artificial intelligence infrastructure within the US.
Other chip-related firms including Lasertec Corp., Screen Holdings Co. and Tokyo Electron Ltd. all fell over 4% at one point. Within the US, Nvidia lost almost $600 billion in market capitalization on investor concern about competition from DeepSeek, which is widely seen as a low-cost rival to the US’s OpenAI and Meta Platforms Inc.
“The undeniable fact that the fee 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 associated fee of semiconductors, that are involved in creating generative AI, can even fall, which is bad news for Japanese makers of chip equipment.”
The impact of DeepSeek “goes to force a pause in some business AI infrastructure plans” and “should cause a slowdown” in AI-related investment, Pelham Smithers, an analyst at UK firm Pelham Smithers Associates, wrote in a research note.
That’s delivering a blow to power generators, who had been expecting AI investment to fuel electricity demand from power-hungry data centers. Shares of Kyushu Electric Power Co., Tokyo Electric Power Co. and Kansai Electric Power Co. fell over 2% Tuesday.
“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.
Mitsubishi Heavy Industries Ltd., whose shares jumped last week on hopes of an AI-driven demand boost for its US gas turbine business, plunged 8.6% at one point, probably the most since August.
Shares of Furukawa Electric Co. and Fujikura Ltd., which manufacture cables for data centers, also declined over 8.5%. Fujikura, Furukawa Electric, Advantest, Mitsubishi Heavy and SoftBank were all among the many worst performers on the Nikkei 225, which was down 0.6% as of 11:30 a.m. in Tokyo.