DeepSeek is a Chinese artificial intelligence company that develops open-source large language models (LLM). (Image: DeepSeek logo)

SEOUL, Jan. 28 (Korea Bizwire) —  The emergence of Chinese AI startup DeepSeek has sent shockwaves through the global tech industry, challenging dominant players like Nvidia and raising questions about the future dynamics of the AI and semiconductor sectors.

DeepSeek recently unveiled its advanced AI models, including the V3 large language model and the R1 inference-specialized model. These models rival the performance of ChatGPT and other U.S.-based platforms but were developed with significantly lower costs—just $5.58 million. The news has highlighted the limitations of U.S. export restrictions on advanced chips to China.

Impact on Nvidia and Korean Semiconductor Giants

DeepSeek’s reliance on Nvidia’s downgraded H800 chip for AI model training has sparked concerns about Nvidia’s high-cost, high-performance chip strategy. On January 27, Nvidia’s stock plunged 16.97%—its steepest drop since March 2020.

South Korean semiconductor companies, such as SK hynix and Samsung Electronics, which supply high-bandwidth memory (HBM) to Nvidia, are also bracing for potential short-term disruptions. SK hynix has been a dominant supplier of HBM, while Samsung is conducting quality tests for its HBM3E chips to supply Nvidia.

While some analysts foresee temporary revenue declines, they expect Nvidia’s market leadership to remain intact, as DeepSeek’s AI models still rely on Nvidia’s chips.

South Korean semiconductor companies, such as SK hynix and Samsung Electronics, which supply high-bandwidth memory (HBM) to Nvidia, are also bracing for potential short-term disruptions. (Yonhap)

Broader Implications for the AI and Semiconductor Industries

DeepSeek’s cost-efficient AI models could lower barriers to entry in the AI market, potentially expanding the ecosystem and driving broader adoption of generative AI technologies. However, heightened U.S.-China tensions over advanced technology are likely to further complicate the global semiconductor landscape.

If China ramps up support for domestic semiconductor firms to counter U.S. restrictions, South Korean companies may face challenges in exporting chips to China.

“DeepSeek’s success could spur the growth of a more accessible, cost-effective AI ecosystem,” one industry insider noted. “However, Korean firms need to differentiate themselves through advanced semiconductor design and cutting-edge manufacturing while investing aggressively in R&D.”

Despite uncertainties, the rise of DeepSeek underscores the rapidly shifting dynamics of the AI and semiconductor sectors, with opportunities and risks for global players.

Kevin Lee (kevinlee@koreabizwire.com)