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Investing.com-- Nvidia supplier Advantest led a rout in Japanese chipmaking stocks on Tuesday as the release of China’s DeepSeek artificial intelligence model sparked questions over slowing capital spending on AI infrastructure.
Losses in Japanese chipmakers tracked overnight losses in their U.S. peers. NVIDIA Corporation (NASDAQ:NVDA) was among the worst hit by this trade, losing nearly $600 billion in market capital in a day.
In Japan, Advantest Corp. (TYO:6857)- which supplies chip testing equipment to Nvidia- slid as much as 10%, while Tokyo Electron Ltd. (TYO:8035) and Renesas Electronics Corp (TYO:6723) lost between 4% and 6%.
Tech conglomerate SoftBank Group Corp. (TYO:9984), which owns chip designer Arm Holdings (NASDAQ:ARM), slid 5.5%.
Most stocks extended steep losses from the prior session, as concerns over DeepSeek sparked a global rout in technology stocks, especially those linked to AI.
DeepSeek R1- a Chinese open source AI model- was released last week, and claimed to be able to match the performance of rivals such as OpenAI’s ChatGPT for a fraction of its budget.
DeepSeek- which is funded by Chinese quant trading firm High-Flyer- also claimed to be running its models on older hardware and that it had spent a much smaller amount to develop its latest R1 model.
The model raised questions over whether the hundreds of billions spent by U.S. internet giants in buying advanced AI chips and building more datacenters was justified. It also raised concerns over a potentially slower outlook for AI-driven chip sales- which have been a key source of chip demand over the past two years.