Semiconductors

AI disruptions won’t slow ABB’s expansion in data centres

ABB is optimistic about the growth of the data centre market despite recent concerns over the rise of energy-efficient AI models such as DeepSeek. The Chinese AI system, which requires fewer chips to run, recently triggered a selloff in tech stocks, raising fears that demand for high-power data centre infrastructure could decline. However, ABB CEO Morten Wierod said key customers have confirmed their investment plans remain unchanged.

The company has benefited significantly from the expansion of data centres, with orders in this segment rising by 23% annually between 2019 and 2023. The sector now accounts for 15% of ABB’s electrification business, up from 8% in 2022. While Wierod declined to give a forecast for 2025, he expressed confidence in continued demand, particularly in China.

ABB sees further opportunities in helping data centres reduce energy consumption. Its technology, including motors and power management systems, can improve efficiency by up to 60%. With AI infrastructure investments accelerating, spurred by a $500 billion commitment from the US government, the company believes the sector will remain a key driver of growth in the coming years.

US investigates DeepSeek for potential AI chip violations

The US Commerce Department is investigating whether DeepSeek, the Chinese AI company that recently launched a high-performing assistant, has been using US chips in violation of export restrictions. These chips are prohibited from being shipped to China, raising concerns about DeepSeek’s rapid rise in the AI sector. Within days of launching, its app became the most downloaded on Apple’s App Store, contributing to a significant drop in US tech stocks, which lost around $1 trillion in value.

The US has imposed strict limits on the export of advanced AI chips to China, particularly those made by Nvidia. These restrictions aim to prevent China from accessing the most sophisticated AI processors. However, reports suggest that AI chip smuggling from countries like Malaysia, Singapore, and the UAE may be circumventing these measures. DeepSeek has admitted to using Nvidia’s H800 chips, which were legally purchased in 2023, but it is unclear whether it has used other restricted components.

The controversy deepened when Anthropic’s CEO Dario Amodei commented that DeepSeek’s AI chip fleet likely includes both legal and smuggled chips, some of which were shipped before restrictions were fully enforced. While DeepSeek has claimed to use only the less powerful H20 chips, which are still permitted to be sold to China, the investigation continues whether these practices undermine US efforts to limit China’s access to cutting-edge AI technologies.

Trump and Nvidia CEO met to discuss DeepSeek and AI chip export

In a meeting at the White House on Friday, US President Donald Trump and Nvidia CEO Jensen Huang discussed the emerging challenges posed by China’s AI advancements, particularly the rapid rise of DeepSeek, a Chinese AI company that has disrupted the global tech industry. The conversation focused on strengthening US leadership in AI technology and tightening restrictions on exporting advanced AI chips to China. While President Trump did not disclose specific details, he described the meeting as ‘good’ and praised Huang as a ‘gentleman.’

DeepSeek has recently sent shockwaves through the tech world by introducing an AI model that matches the performance of leading US technologies but at a fraction of the cost. Its launch has raised concerns about China’s ability to close the gap in AI development with the US. Within days of its debut, DeepSeek became the most downloaded app in Apple’s App Store, and its emergence wiped approximately $1 trillion off the market value of US tech stocks, including a 17% plunge in Nvidia shares. The development has reignited fears that China could challenge the United States’ dominance in AI.

As part of the US response, Trump’s administration is considering further restrictions on Nvidia’s H20 chips, designed for the Chinese market. These chips, capable of powering AI software, were specifically developed to comply with previous export limits imposed by the Biden administration. However, the Trump administration aims to tighten the rules further to ensure advanced computing power stays within US borders and allied nations. Discussions among Trump officials about restricting the shipments of these chips are in the early stages, but they reflect a growing bipartisan concern about maintaining technological supremacy over China.

The president’s meeting with Nvidia’s CEO highlighted a potential opportunity for US tech companies. According to a source familiar with the discussions, Trump views DeepSeek’s ability to produce low-cost AI models as a wake-up call, suggesting that American firms could adopt more cost-efficient strategies to compete without massive spending. The administration sees this as a chance to recalibrate the US AI innovation and leadership approach.

Lawmakers on both sides of the aisle have echoed calls for tighter controls. Republican John Moolenaar and Democrat Raja Krishnamoorthi, co-leads of the House Select Committee on China, urged the Commerce and State Departments to review US export controls in light of China’s advancements. Their concerns are amplified by reports suggesting that DeepSeek may have used restricted US chips in its operations, prompting an investigation by the Commerce Department.

The US government has long relied on export controls to maintain its technological edge, but DeepSeek’s rise has exposed vulnerabilities in this strategy. As the US grapples with its response, the battle for AI dominance will be a defining feature of US-China relations in the years ahead. The outcome will impact the global technology landscape and influence geopolitical dynamics in an increasingly interconnected world.

Samsung faces slowdown in AI chip sales

Samsung Electronics has warned of weak sales for its AI chips in the first quarter, citing US export restrictions on high-bandwidth memory (HBM) chips to China. These restrictions, combined with the company’s struggle to meet Nvidia’s HBM chip requirements, are expected to impact demand. Samsung’s reliance on Chinese customers for about 20% of its HBM sales makes it particularly vulnerable. Despite this, the company plans to release upgraded HBM3E products in March to address shifting market demands.

The company also reported a 29% drop in operating profit for the fourth quarter, totalling 6.5 trillion won ($4.48 billion). Samsung expects limited earnings growth in the first quarter, driven by sluggish demand in the memory chip market, particularly for smartphones and personal computers. In addition, delays in GPU production, mainly due to strong demand and engineering challenges, have affected memory chip requirements for servers in data centres.

Samsung’s mobile phone division also faced challenges, with a 22% drop in operating profit in the fourth quarter. The company’s decision to use Qualcomm’s application processors instead of its own Exynos chips for the Galaxy S25 lineup has weakened its position in the mobile chip market. Despite these hurdles, Samsung anticipates a recovery in the memory market by the second quarter, depending on its ability to supply Nvidia with advanced HBM3E chips.

While competitors SK Hynix and TSMC have benefitted from the AI boom, with record profits, Samsung’s performance in the AI chip market has fallen behind. The company’s future performance will heavily depend on its ability to secure a stronger foothold in the rapidly growing AI sector.

Nvidia shares bounce back after rough week

Shares of Nvidia rose in Europe on Wednesday, signalling a potential recovery after a sharp decline earlier in the week. The company, a key player in the AI sector, saw its Frankfurt-listed shares increase by 2%, following an 8.9% gain on Wall Street the previous day. This bounce came after a steep drop in Nvidia’s market value on Monday, triggered by the emergence of China’s DeepSeek AI tool, which posed a challenge to established players like OpenAI’s ChatGPT.

The decline in Nvidia’s stock earlier in the week saw the company lose nearly $600 billion in market value, marking the largest single-day loss in history for any company. However, markets showed signs of stabilising on Wednesday, bolstered by a surge in shares of ASML, the Dutch company that manufactures tools for chip production. ASML’s 11% jump helped lift European tech stocks, with chipmakers BE Semiconductor and ASM International also posting solid gains.

Investors seemed to regain confidence, with some believing that DeepSeek’s advancements might not disrupt the broader AI market. According to market strategist Chris Weston, the innovation from DeepSeek could even generate new demand for Nvidia’s GPUs, which are critical for AI applications. Meanwhile, Microsoft and OpenAI are investigating whether DeepSeek improperly used data from ChatGPT’s technology.

As markets remain volatile, investors are now looking ahead to earnings reports from major tech giants like Nvidia, Apple, and Microsoft, which could provide more clarity on the sector’s outlook. Despite ongoing uncertainties, the overall sentiment in the tech sector appeared more positive by midweek.

ASML exceeds expectations with surge in AI demand

ASML, the leading maker of computer chip equipment, reported impressive fourth-quarter bookings of 7.09 billion euros ($7.39 billion), significantly surpassing analyst expectations. The surge in orders was driven by the increasing demand for advanced chip production tools fueled by the boom in AI. Following the announcement, ASML’s stock rose 11% to 722 euros, signalling investor optimism despite recent market volatility.

Analysts had expected bookings to total around 3.99 billion euros, up from 2.63 billion euros in the previous quarter. ASML’s CEO, Christophe Fouquet, emphasised that AI growth is a key driver for the industry, with major companies like TSMC, ASML’s largest customer, benefiting from the rise in AI chip demand. The company reported a net income of 2.7 billion euros on sales of 9.3 billion euros for the quarter, surpassing expectations.

Despite the positive results, analysts caution that the long-term impact of DeepSeek’s AI model—released this week and requiring less computing power than competitors—remains uncertain. Some fear it could affect the large investments tech giants make in AI chips. However, ASML’s strong quarterly performance and its 2025 sales forecast, ranging from 30-35 billion euros, suggest continued growth, particularly from companies like TSMC and SK Hynix.

ASML’s largest market was the US in the fourth quarter, accounting for 28% of sales, closely followed by China. However, the company anticipates that sales in China will decline, partly due to export restrictions on chip equipment imposed by the US and Dutch governments for national security reasons.

OpenAI praises DeepSeek’s affordable AI model

OpenAI CEO Sam Altman has called Chinese startup DeepSeek’s R1 model “impressive,” highlighting its ability to deliver advanced AI performance at a fraction of the cost. According to DeepSeek, its R1 model is 20 to 50 times cheaper to use than OpenAI’s own models, offering significant affordability without sacrificing quality.

Chinese AI, DeepSeek gained global recognition last month when it revealed that training its DeepSeek-V3 model required less than $6 million in computing resources, leveraging lower-cost Nvidia H800 chips. In contrast, Altman noted that OpenAI remains committed to prioritising increased computing power, suggesting this as an important factor in achieving AI progress.

The emergence of DeepSeek has disrupted the AI industry, leading to a significant sell-off in tech stocks, including Nvidia, which recorded a historic single-day loss of $593 billion in market value. Analysts say DeepSeek’s cost-efficient approach raises doubts about the necessity of the massive financial investments made by US tech firms in AI development.

As DeepSeek continues to attract attention, the startup’s success underscores a shift in the AI market, with low-cost models challenging traditional notions of progress in AI.

DeepSeek’s AI model sets new benchmark in image generation

Chinese AI startup DeepSeek has announced that its Janus-Pro-7B model has surpassed competitors, including OpenAI’s DALL-E 3 and Stability AI’s Stable Diffusion, in benchmark rankings for text-to-image generation. This achievement solidifies DeepSeek’s reputation as a key player in the rapidly evolving AI market.

According to a technical report, the Janus-Pro model builds upon its predecessor by incorporating enhanced training processes, higher-quality data, and advanced scaling, resulting in improved stability and more detailed image outputs. The company credited the inclusion of 72 million high-quality synthetic images, combined with real-world data, for the model’s superior performance.

This success follows the launch of DeepSeek’s new AI assistant based on the DeepSeek-V3 model, which has become the top-rated free app in the US Apple App Store. The news sent shockwaves through the tech industry, leading to declines in shares of companies like Nvidia and Oracle, as investors reassessed the competitive dynamics in AI development.

OpenAI and Stability AI have yet to comment on the claims. DeepSeek’s achievements highlight the growing influence of Chinese firms in cutting-edge AI innovation, setting the stage for heightened competition in the global tech market.

Taiwan emphasises strong ties amid Trump’s tariff threat

Taiwan described its semiconductor business with the US as a mutually beneficial partnership in response to tariff threats by Donald Trump. The economy ministry highlighted the complementary relationship between US-designed and Taiwan-produced chips, which has bolstered industries in both nations.

Trump proposed tariffs on imports of chips, pharmaceuticals, and steel, aiming to bring production to US soil. Taiwan stressed its commitment to close cooperation with Washington to address global challenges while supporting shared national interests. The presidential office reinforced this sentiment, emphasising trust and collaboration in high-tech fields.

Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, remains central to the global tech supply chain. Despite tariff concerns, TSMC’s ongoing $65 billion investment in US facilities demonstrates a commitment to bilateral cooperation. Taiwan’s economy minister noted minimal expected impact from tariffs due to the island’s technological leadership.

Taiwan’s trade surplus with the US surged 83% last year, fuelled by semiconductor demand. While Taiwan remains cautious about evolving US trade policies, it remains optimistic about maintaining robust economic ties.

Australian shares hit by DeepSeek’s rise in AI

The launch of DeepSeek’s cost-efficient AI model has sent shockwaves through Australian tech markets, with shares in AI-related companies experiencing steep declines. Investors are increasingly worried that the Chinese startup’s affordable technology could undermine the dominance of established players in the sector.

Among the biggest losers were AI software firm Appen, which saw its stock drop by 3.3%, and chipmaker Brainchip, which lost 10.3%. The technology sub-index fell by 1%, with major data centre operators also taking a hit. Analysts expressed concerns that DeepSeek’s success might reduce demand for AI infrastructure, which had driven heavy investments in Australian data centres.

DeepSeek’s AI assistant, launched last week, has already outpaced US competitor ChatGPT in downloads on Apple’s App Store. This rapid rise has sent ripples through the global tech sector, contributing to Nvidia’s record $592.7 billion market loss.

As Australian investors reassess their exposure to AI stocks, market strategists predict a shift towards safer sectors such as healthcare and consumer staples, after DeepSeek’s disruptive impact.