
An illustration displaying the DeepSeek emblem / Reuters-Yonhap
Samsung Electronics and SK hynix are anticipated to face rising uncertainties within the quickly rising synthetic intelligence (AI) reminiscence chip enterprise following the emergence of Chinese language AI startup DeepSeek, which has dealt a blow to Nvidia and different U.S. AI tech corporations, consultants mentioned Friday.
DeepSeek lately launched its newest inference mannequin, R1, which delivers efficiency similar to OpenAI’s o1. The startup mentioned coaching the mannequin value simply over $5.5 million regardless of utilizing lower-grade Nvidia graphic processing items (GPUs) designed for the Chinese language market.
Whereas many particulars stay to be verified, this has raised questions in regards to the competitiveness of main tech corporations which have invested billions in AI infrastructure.
„The paradigm that large-scale funding is crucial for AI progress has modified. Massive tech firms at the moment are more likely to deal with extra environment friendly methods slightly than blindly competing to safe the most recent GPUs,“ iM Securities analyst Track Myung-sup mentioned.
„This shift might negatively impression home reminiscence semiconductor firms which were supplying high-capacity high-bandwidth reminiscence (HBM) to Nvidia in response to AI demand,“ he mentioned.
In response to this latest improvement, buyers have offered off shares of Nvidia, which holds a 70 % share of the AI semiconductor market. On Jan. 27 (native time) alone, the corporate noticed its market capitalization drop by roughly $589 billion, with no indicators of restoration but. Different U.S. shares linked to its AI worth chain are additionally going through struggles.
If demand for Nvidia’s high-performance GPUs weakens because the market expects, SK hynix — which nearly solely provides HBM3e to Nvidia — might see its income decline considerably.

An illustration displaying the Nvidia emblem and a lowering inventory graph / Reuters-Yonhap
HBM3e, essentially the most superior model of its variety, performs a vital position in enhancing GPU efficiency, and SK hynix generates 40 % of its whole DRAM gross sales from its HBM enterprise. Samsung Electronics can also be present process high quality testing in preparation for supplying these chips to Nvidia, eyeing it as its subsequent income supply.
Reflecting the uncertainties, the inventory costs of Samsung Electronics and SK hynix on Friday did little to ease market considerations. Samsung’s shares dropped 2.4 % to 52,400 received ($36.07), whereas SK hynix noticed a pointy 9.8 % decline, falling to 199,200 received. The decline got here on Korea’s first buying and selling day since DeepSeek’s announcement, following the nation’s Lunar New 12 months vacation.
Shares associated to energy and electrical energy, which had beforehand surged on expectations of benefiting from AI infrastructure improvement, additionally dropped sharply.
„As we provide HBM for GPUs to a number of distributors, we’re carefully monitoring business traits and contemplating numerous eventualities,“ Kim Jae-joon, govt vice chairman of the machine options (DS) division at Samsung, informed buyers throughout a fourth-quarter earnings convention name on Friday.
„As each long-term alternatives and short-term dangers coexist out there, we are going to guarantee a swift and well timed response to its speedy adjustments,“ he mentioned.
Past market dynamics, geopolitical tensions are including one other layer of uncertainty for Korean chipmakers.
To solidify AI management, the U.S. authorities is reportedly contemplating measures to dam exports of Nvidia’s low-end H20 chip to China, which is provided with Samsung Electronics’ HBM. In response, China could intensify assist for its home semiconductor corporations and speed up its push for self-sufficiency, doubtlessly reshaping demand for Korean chips.
„If the U.S. authorities makes use of this incident as grounds to impose a full-scale ban on the sale of Nvidia’s China-specific GPUs, Korean DRAM producers, which provide HBM for these GPUs, may also endure detrimental repercussions,“ Track mentioned.

The emblem of SK hynix is seen on its product in the course of the twenty sixth Semiconductor Exhibition in Seoul, Oct. 23, 2024. Reuters-Yonhap
Robust world demand for Korean chips
Regardless of latest disruptions, business consultants see sustained progress forward for Korean chipmakers. Many imagine that Nvidia’s market dominance will persist. In spite of everything, even DeepSeek’s R1 was developed utilizing Nvidia GPUs.
„If the identical algorithm had been utilized to high-performance Nvidia chips, it might obtain even higher outcomes than DeepSeek’s,“ Lee Jong-hwan, a system semiconductor engineering professor at Sangmyung College, mentioned.
One other potential upside is the technological developments triggered by the DeepSeek breakthrough, which might contribute to the broader enlargement of the AI ecosystem.
„Because the market continues to develop, the AI semiconductor sector is poised for additional enlargement. The business has now discovered in regards to the chance that low-grade units can ship robust efficiency. On condition that Samsung and SK additionally present low-grade choices, their HBM enterprise might see additional progress on this space,“ Lee mentioned.
„HBM reminiscence is totally vital with the present know-how, and Samsung and SK might see elevated demand because of this,“ he mentioned.
Daol Funding & Securities analyst Ko Younger-min mentioned, „There’s nonetheless a necessity for technological developments to realize synthetic normal intelligence, and competitors amongst huge tech firms is anticipated to proceed.“
Ko continued, „Amid the continuing development of accelerating capital expenditures for market dominance, the semiconductor and {hardware} sectors are more likely to stay in a positive atmosphere.“