A new AI model release from a Chinese startup sent ripples through the stock market, validating Beijing's push for technological self-sufficiency and sparking a major rally in domestic semiconductor firms. DeepSeek's launch of its V4 model, which is deeply compatible with local chips like Huawei's Ascend, drove shares of SMIC and Hua Hong Semiconductor up by as much as 12 percent, signaling a potential challenge to Nvidia Corp.'s dominance in the AI hardware space.
The announcement from DeepSeek, a company founded by hedge fund manager Liang Wenfeng, detailed its new Mixture-of-Experts (MoE) model, DeepSeek-V4. The model boasts a massive one million token context window, rivaling and in some cases reportedly outperforming offerings from OpenAI and Google.
The key market driver was the model's deep adaptation for domestic hardware. Shares in SMIC (00981.HK), China's largest chipmaker, surged 8.3% to HKD63.3, while competitor Hua Hong Semiconductor (01347.HK) jumped 11.88% to HKD105. The gains reflect investor optimism that Chinese chipmakers can supply the hardware necessary for the demanding AI sector, a market long dominated by Nvidia's CUDA-enabled GPUs. Other domestic chip-related stocks, including Naxin Micro and Biren Technology, also saw significant gains.
This development marks a critical step in China's "de-CUDA-ization" initiative, a strategic push to create a domestic AI ecosystem independent of U.S. technology. By optimizing its powerful new model for Huawei's Ascend chips, DeepSeek provides a viable, high-performance software and hardware combination that could reduce reliance on Nvidia. For investors, this signals a potential re-evaluation of the competitive landscape, where domestic hardware makers like SMIC and Hua Hong gain a significant catalyst for growth, potentially capturing market share previously held by American firms. While other AI application stocks showed mixed performance, the clear winners were the companies building the foundational hardware for China's AI ambitions.
This article is for informational purposes only and does not constitute investment advice.
