South Korean shares extended their decline on Monday after DeepSeek released its latest artificial intelligence model, prompting investors to reassess demand for chips used in AI infrastructure. Concerns about whether AI-related projects can continue to secure funding also weighed on sentiment. Semiconductor stocks bore the brunt of the selling, with the KOSPI falling as much as 3.2% intraday.
Samsung Electronics and SK Hynix Fall More Than 4%
Samsung Electronics and SK Hynix each fell more than 4% at one point before paring some of their losses. As two of South Korea's largest semiconductor companies by market value, their share-price moves have a direct influence on the KOSPI's performance.
Investors are focused on how DeepSeek's latest model could alter expectations for chip demand. If AI models can deliver comparable results with greater efficiency or fewer hardware resources, data centers and other customers may reduce their expected purchases of memory chips. So far, however, there has been no specific evidence that orders or earnings at South Korean chipmakers have changed. The pressure is instead being reflected in a reassessment of prospective demand.
Japanese Chip-Equipment Stocks Also Under Pressure
Technology shares elsewhere in Asia also declined. Japan's tech-heavy Nikkei 225 fell about 2%, while chip-equipment maker Advantest was among the more heavily hit stocks. The simultaneous weakness in South Korean and Japanese markets suggests that investors are reducing exposure to parts of the AI supply chain.
The selloff is not solely about one model. Alongside questions about memory-chip demand following DeepSeek's release, AI projects require sustained and substantial investment. Companies' ability to raise financing and their capital-spending plans have therefore become another focus for the market.
As investors question whether AI investment can continue expanding at its current pace, chipmakers, equipment suppliers and other technology companies face pressure on their valuations. That concern extends beyond immediate product demand to the funding required to build and operate AI infrastructure.
Demand and Funding Move to the Fore
Semiconductor companies carry significant weight in South Korea's stock indexes and export expectations, meaning declines in chip shares can amplify broader market volatility. The narrowing of Samsung Electronics' and SK Hynix's intraday losses indicates that some selling pressure eased, but it does not show that concerns over AI demand have been resolved.
Investors will continue to monitor actual chip orders, demand for memory products and any changes to AI-related capital expenditure. Until those indicators become clearer, debate over the efficiency of DeepSeek's model and the funding conditions for AI projects may continue to influence trading in South Korean and Japanese technology stocks.