2025-01-28: DeepSeek's Rapid Impact in the AI Market
Stargate and Trump's Economic Policies and Global Supply Chain Risks
Good Morning,
Below are some of the most important developments in the artificial intelligence, semiconductors, and cloud computing sectors in Asia today.
▪️ China: Semiconductor Sector's Resurgence Driven by AI and Consumer Demand in 2025
As of January 25, 2025, the A-share electronics sector has seized the attention of investors, with 67 companies engaging in institutional research.
▪️ China: DeepSeek's Rapid Impact in the AI Market
Chinese companies are making significant strides in artificial intelligence (AI), with leaders in the field including DeepSeek, ByteDance, and Baidu.
▪️ South Korea: Strategic Leadership Shift: Ryu Sung-soo Takes Helm as CEO of SK hynix America
In a significant leadership change, South Korean chip giant SK hynix Inc has appointed Ryu Sung-soo as the new CEO of its US subsidiary, SK hynix America Inc., succeeding Kim Ju-seon.
▪️ Taiwan: Stargate and Trump's Economic Policies and Global Supply Chain Risks
US President Trump has launched the ambitious "Stargate" project to bolster artificial intelligence development nationwide.
For more information on these developments, please see the full report below.
Thanks for reading,
Rodney J Johnson
Today's Developments
Widely Reported On Issues of Importance
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Semiconductor Sector's Resurgence Driven by AI and Consumer Demand in 2025
As of January 25, 2025, the A-share electronics sector has seized the attention of investors, with 67 companies engaging in institutional research.
This surge in interest is largely driven by advancements in AI and terminal device technologies, which are paving the way for a sector recovery expected in 2025. Notably, the semiconductor industry is at the forefront, focusing on chip design for consumer electronics, with significant interest in companies like Crystal Optoelectronics and GigaDevice. The trend is largely attributed to a resurgence in consumer demand and the rising need for storage chips propelled by AI advancements, offering promising investment opportunities across various devices.
The semiconductor industry is witnessing a strong rebound, with 61 out of 110 listed companies in the A-share sector forecasting net profit growth in 2024. Key drivers include generative AI, automotive electronics, and communication technologies, with sustained prosperity expected through 2025. Companies like SmartSens, Hangzhou Changchuan Technology, and Shenzhen Demingli Technology anticipate net profit growth exceeding 1000%, while others such as Shanghai Will Semiconductor and Rockchip predict increases ranging from 300% to 727.42%.
AMEC is expected to transition from losses to profitability, fueled by a resurgence in global electronics demand and AI advancements. Rockchip attributes its growth to developments in automotive electronics, whereas GigaDevice is addressing growing downstream market demand. SmartSens aims to enhance sales across smart security, smartphones, and automotive electronics. The industry's optimism is underscored by potential mergers and acquisitions that could consolidate domestic market share.
Investment consultants are pointing to emerging growth areas in smart cars, smart healthcare, and communications. Companies like North Huachuang Technology and Hangzhou Silan Microelectronics are experiencing steady orders and improvements, supported by favorable policies and advancements in electric vehicle technology, indicating a sustained positive trend for the industry.
References for this Development
半导体行业“暖意浓” 61家相关上市公司2024年业绩预喜
Caijing | Local Language | News
聚焦终端+AI 机构扎堆调研电子产业链公司
Sina Finance | Local Language | News
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DeepSeek's Rapid Impact in the AI Market
Chinese companies are making significant strides in artificial intelligence (AI), with leaders in the field including DeepSeek, ByteDance, and Baidu.
Baidu’s Wenku platform, now enhanced with generative AI, attracts 40 million paying users and records a 60% year-on-year revenue increase, marking a surge in AI adoption.
Gartner's research indicates that more than 10% of Chinese enterprises are implementing AI technology to enhance their operations.
The AI landscape is shifting toward the development of agents capable of automating complex processes, moving beyond conventional task-focused models. Tencent's initiative to incorporate AI agents into WeChat exemplifies the advanced applications emerging in China. Industry experts, such as Jo Huang from Raffles Family Office, note that China’s AI development pace is on par with the United States, drawing substantial investment attention.
In response to changing consumer preferences, brands like Honor, Xiaomi, and Vivo are equipping smartphones with efficient, cloud-independent AI features. China's distinct regulatory landscape compared to the US has sped up development, although challenges with data sharing and intellectual property compliance persist. While multinational corporations proceed with caution, local firms in China actively explore AI technologies.
Among investors and partners, DeepSeek has captured considerable interest, drawing companies like Zhejiang Dongfang and Huajin Capital, and infrastructure support from entities such as Inspur Information and Sugon. The competitive AI market in China is expanding, with projections estimating it to exceed 70 billion yuan by 2026. The period between 2022 and 2027 is expected to witness a 148% growth in AI large model applications, signaling transformative technological advancements.
The acceleration towards AI intelligent bodies promises a substantial market impact, with strong net profit growth anticipated among AI intelligent body concept stocks, offering considerable returns for stakeholders.
Launched on January 20, 2025, DeepSeek-R1 quickly became the top free app download on Apple's App Store in both China and the US, surpassing OpenAI's ChatGPT. The model has caught Silicon Valley's attention, with industry leaders acknowledging the benefits of open-source models like DeepSeek-R1 over proprietary alternatives.
Tech leaders have commended DeepSeek-R1, with Nvidia's Jim Fan noting its sustainable growth via reinforcement learning. Marc Andreessen, founder of Andreessen Horowitz, hailed it as a groundbreaking development, with reasoning capabilities comparable to leading models like OpenAI's.
DeepSeek offers highly competitive API pricing, charging CNY1 (approximately $0.14) per million tokens for input and CNY16 (around $2.20) for output, undercutting OpenAI's fees. Founded in 2023 by High-Flyer Quant, DeepSeek is focused on developing cost-effective, open-source AI, as demonstrated by its earlier release, DeepSeek-V3, which had a training cost of about $6 million. This comes amid large-scale investments from entities like OpenAI, planning a $500 billion AI infrastructure initiative.
References for this Development
震动科技界！AI领域“黑马” DeepSeek出圈 概念股曝光
Shocking the tech world! DeepSeek, a "dark horse" in the AI field, is exposed as a concept stock
Sina Finance | Local Language | News
Chinese AI applications now have bigger aims — they're looking beyond chatbots
CNBC | English | News
Chinese AI Startup DeepSeek's Open-Source LLM Gets High Praise in Silicon Valley
Yicai Global | English | News
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Strategic Leadership Shift: Ryu Sung-soo Takes Helm as CEO of SK hynix America
In a significant leadership change, South Korean chip giant SK hynix Inc has appointed Ryu Sung-soo as the new CEO of its US subsidiary, SK hynix America Inc., succeeding Kim Ju-seon.
This announcement, made public on January 26 through social media, marks a strategic move for the company. Ryu is well-known for his notable advances in memory and semiconductor solutions, especially in high bandwidth memory (HBM) technology and DRAM product planning. Before stepping into the CEO role, he was the Vice President responsible for the global sales and marketing of the HBM business since 2019.
In his new role, Ryu will manage the operations at SK hynix America based in San Jose, a vital center for interactions with US clients. The company expresses strong confidence in Ryu's leadership capabilities and anticipates that he will steer SK hynix America into a promising future.
Concurrently, SK hynix has reported remarkable financial results for 2024, with sales reaching 66.2 trillion won, or approximately US$46.2 billion, alongside an operating profit of 23.5 trillion won. This strong financial performance is largely attributed to the increased sales of HBM products amid the ongoing boom in artificial intelligence (AI).
References for this Development
SK hynix names Ryu Sung-soo as new CEO of its US unit
Korea Times | English | News
SK hynix appoints Vice President Ryu Sung-soo as new CEO of U.S. unit
Joongang Ilbo | English | News
SK hynix names Ryu Sung-soo as new CEO of its U.S. unit
Yonhap | English | News
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Stargate and Trump's Economic Policies and Global Supply Chain Risks
US President Trump has launched the ambitious "Stargate" project to bolster artificial intelligence development nationwide.
However, concerns linger about the US dependency on Taiwanese semiconductors, critical components for AI technology. Philip Wolf points out that companies such as Nvidia are heavily reliant on Taiwan's TSMC for chip manufacturing. Any regional disruptions could trigger severe supply chain issues. Although TSMC has plans to establish factories in the United States, doubts persist about their capacity to meet demand during crises. Experts have issued stark warnings that a loss of access to these chips could lead to economic repercussions reminiscent of the Great Depression. To safeguard the $500 billion Stargate project, Wolf advises reducing this reliance on Taiwanese chips, given that domestic production currently falls short.
Upon taking office, President Trump inherited a notably high stock market, a situation elaborated upon by Spencer Jakab in the Wall Street Journal. While Trump is likely eager to avoid a market downturn, Jakab argues that a price correction could ultimately benefit investors. The article draws parallels with Herbert Hoover's presidency, which witnessed a market crash and the start of the Great Depression. Although the probability of such a historic crash remains low, current stock valuations appear significantly elevated. Indicators like the Cyclically Adjusted Price/Earnings Ratio (CAPE Ratio) suggest unprecedented high valuations compared to those under previous administrations, suggesting considerable risk.
Trump has vocally opposed wind energy, citing concerns about aesthetics, wildlife impact, and financial challenges. This has led to a temporary halt on federal permits and loans for wind projects, creating distress within the industry. The American Clean Power Association has criticized these actions, claiming they establish bureaucratic hurdles that stymie domestic energy innovation. With wind energy comprising around 10% of US electricity in 2023, these policies pose a threat to the nation’s position in the global clean energy sector, especially as nations like China aggressively advance their wind energy initiatives. The offshore wind sector, in particular, grapples with challenges due to limitations on federal development sites, consequently driving up consumer costs.
On the automotive front, Nissan Motor Co is revisiting its electric vehicle (EV) production strategy in the US due to a halt in its Mexico joint venture and potential policy changes under Trump's administration. The production timeline for EVs at Nissan's Mississippi plant hinges on whether the administration will abolish the $7,500 EV buyer tax credit. Despite planning to shift to gas-electric hybrids to satisfy market demands, Nissan is discontinuing two gas-powered Infiniti models due to low demand, affecting production at its Mexico plant shared with Mercedes-Benz. The company also confronts potential tariffs on vehicles from Mexico and Canada, which could result in a 25% production reduction at its US plants and consequent job losses.
The US Federal Reserve has chosen to pause interest rate cuts in an effort to balance inflation management amid President Trump's advocacy for lower rates. Previously, the Fed had lowered its key lending rate by one percentage point over four months, but a spike in inflation beyond the 2% target prompted a more cautious approach. Despite political tensions, the Fed is anticipated to maintain stable rates between 4.25% and 4.50%. This policy pause arises amid stable labor markets and steady economic growth. However, economists caution that Trump's tariffs and immigration policies could exacerbate inflation, leading to further postponements in rate adjustments.
Early in his presidency, Trump rescinded several policies from his predecessor, President Biden, including the withdrawal from the OECD global tax agreement. This accord, reflecting substantial international tax reform, had garnered support from nearly 140 countries. The Trump administration criticized the OECD framework for being too restrictive and announced plans for retaliatory measures within 60 days against foreign firms benefiting from these tax policies. Potential tariffs on imports from Canada, Mexico, and China could intensify trade tensions, possibly leading to a global tax and trade war with substantial effects on corporate compliance costs and supply chains worldwide.
Trump's economic vision aims to foster a "golden age" economy through policies emphasizing self-reliance and bolstering American manufacturing. This strategy includes tariffs, such as a 10% levy on Chinese imports and up to 25% on imports from Canada and Mexico, to support domestic industries. Critics caution against potential market disruptions and adverse impacts on productivity due to inconsistent tariff policies. There are persistent concerns that tax cuts coupled with stringent immigration regulations could trigger inflationary pressures and increase borrowing costs, posing challenges to export-oriented firms, especially in the context of a robust US dollar.
References for this Development
Trump statements cast chill over US wind energy sector
Taipei Times | English | News
Fed prepares to pause rate cuts to avoid Trump’s ire
Taipei Times | English | News
「矽盾」註定會被川普拔掉？德語媒體：只要尖端晶片來自台灣，美國終究受制於人
The Storm Media | Local Language | News
快訊／關稅戰喊卡！哥倫比亞態度180度急轉彎：同意川普所有條件
News/Tariff war calls for a halt! Colombia takes a 180-degree turn: agrees to all Trump’s conditions
ETtoday | Local Language | News
季凡觀點》從胡佛到川普：歷史教訓與未來的市場挑戰
Ji Fan’s Viewpoint” From Hoover to Trump: Historical Lessons and Future Market Challenges
The Storm Media | Local Language | News
川普上任火速簽退OECD全球稅收協議 KPMG：恐引發稅收、貿易戰
ETtoday | Local Language | News
Nissan Motor Co looks to Trump-proof production
Taipei Times | English | News
川普「黃金年代」經濟策略 成效難料
The results of Trump’s “golden age” economic strategy are unpredictable
Liberty Times Net | Local Language | News
川普2.0衝擊台灣重電股？ 華城總經理釋疑
ETtoday | Local Language | News
News Media
Key News Articles by Country
China
Robots take giant leap from stiff to smooth
China Daily | English | News
The SE01 humanoid robot from EngineAI Robotics demonstrated notable advances in robotics during a long-distance walking test in Shenzhen on January 8. Its smooth and organic movements closely replicate human motion, surpassing previous models. Founder Zhao Tongyang forecasts that humanoid robots will become household staples in the next decade, likening the trend to the early smartphone era, though further development is needed to improve performance and reduce costs.
震动科技界！AI领域“黑马” DeepSeek出圈 概念股曝光
Shocking the tech world! DeepSeek, a "dark horse" in the AI field, is exposed as a concept stock
Sina Finance | Local Language | News
DeepSeek, a model company under Huanfang Quantitative, has made waves with its inference model, DeepSeek-R1, which ranked third in a foreign big model test on January 24 and tied for first in the style control model category. This has heightened interest in its competitive performance compared to OpenAI's models, its complete open-source accessibility, and its cost-effective API pricing. Additionally, this announcement aligns with China's $500 billion "Stargate" plan, positioning DeepSeek as a critical player in the AI market.
Chinese AI applications now have bigger aims — they're looking beyond chatbots
CNBC | English | News
Chinese companies are rapidly advancing their artificial intelligence (AI) capabilities, expanding from chatbots to more sophisticated applications. Notable releases from firms like DeepSeek and ByteDance demonstrate this trend. Baidu's Wenku platform, now integrated with generative AI, has reached 40 million paying users and reported a 60% year-on-year revenue increase, illustrating the growing adoption of AI in businesses. According to Gartner, over 10% of Chinese enterprises are currently utilizing AI.
Chinese AI Startup DeepSeek's Open-Source LLM Gets High Praise in Silicon Valley
Yicai Global | English | News
DeepSeek-R1, an open-source large language model from Chinese startup DeepSeek, launched on January 20, 2025, quickly topped free app downloads on Apple's App Store in China and the US, surpassing OpenAI's ChatGPT. This model has garnered attention in Silicon Valley, with industry leaders noting that open-source models like DeepSeek-R1 are showing clear advantages over proprietary options.
聚焦终端+AI 机构扎堆调研电子产业链公司
Sina Finance | Local Language | News
As of January 25, 2025, 67 companies in the A-share electronics sector have disclosed institutional research minutes, revealing strong investor interest in "focusing on terminals and AI." This signals a proactive approach to identify opportunities as the sector gears up for a projected recovery in 2025, driven by advancements in AI technology and consumer electronics.
半导体行业“暖意浓” 61家相关上市公司2024年业绩预喜
Caijing | Local Language | News
The semiconductor industry is rebounding, with 61 out of 110 listed companies in the A-share sector expected to report net profit growth in 2024. Key drivers include advancements in generative AI, automotive electronics, and communication technologies, leading experts to anticipate continued prosperity into 2025.
India
Andhra Pradesh to set up data city, AI hubs in Vizag
The Economic Times | English | News
Andhra Pradesh plans to establish a Data City near Visakhapatnam, featuring data centres and AI hubs, as part of its commitment to create 20 lakh jobs in five years. The 500-acre site in Madhurawada will be modeled after Hyderabad's Hitec City to attract IT sector firms.
Japan
ＡＩリスクに「雇用代替」追加 政府の事業者向け指針、対策促す
Government guidelines for businesses urge measures to include "employment substitution" as AI risk
Tokyo Shimbun | Local Language | News
The government is expanding its AI guidelines for businesses to address a wider array of risks linked to advancements in artificial intelligence. This initiative aims to raise awareness of these risks and urges companies to integrate them into their operations. Notably, the guidelines will introduce "employment substitution," which raises concerns about traditional job displacement, and "excessive reliance" on AI in decision-making processes, particularly in recruitment, potentially sidelining human judgment.
ＡＩ関連株が軒並み安、中国DeepSeekの最新モデルが脅威との見方
AI-related stocks fall across the board as China's DeepSeek's latest model poses a threat
Yahoo Finance | Local Language | News
AI-related stocks saw a notable decline on January 27, 2025, amid rising concerns over China's DeepSeek and its new AI model, seen as a challenge to U.S. tech dominance. Advantest and Fujikura shares dropped 8.6% on the Tokyo Stock Exchange, contributing to a broader downturn in semiconductor and AI sectors. The MSCI Japan Semiconductor Index fell 4.6%, while the TOPIX Nonferrous Metals Index decreased by 3.7%.
AIリスクに「雇用代替」追加 政府の事業者向け指針、対策促す
Nishi Nippon | Local Language | News
South Korea
SK hynix names Ryu Sung-soo as new CEO of its U.S. unit
Yonhap | English | News
South Korean chip giant SK hynix Inc. has appointed Ryu Sung-soo as the new CEO of its U.S. unit, SK hynix America Inc., succeeding Kim Ju-seon. The announcement was made on January 26. Ryu is noted for his contributions to memory and semiconductor solutions, especially in high bandwidth memory (HBM) technology and DRAM product planning.
삼성 반도체 '올인'했다는데…업계에 퍼진 '파다한 소문' [황정수의 반도체 이슈 짚어보기]
Hankyung | Local Language | News
Samsung Electronics is grappling with significant challenges in its semiconductor division, particularly regarding high-bandwidth memory (HBM) supply to Nvidia, which has faced delays. The company's response includes leadership changes and acknowledgment of declining competitiveness, a situation amplified by a weakening in technology leadership as noted by Moody's.
챗GPT부터 에이전트까지…오픈AI, 서비스 다각화
From ChatGPT to Agent… OpenAI, Service Diversification
ET News | Local Language | News
OpenAI is expanding its services with a new AI agent called 'Operator,' designed to perform human tasks independently. This move shifts the focus from its generative AI product, ChatGPT, as OpenAI aims to be a comprehensive AI service provider. Currently in preview, Operator can make hotel reservations, find restaurants, and facilitate online shopping through user commands.
실리콘밸리서 '대중 봉쇄에도 中 AI, 美 맹추격' 평가 나와
Silicon Valley: 'China's AI is hotly pursuing the US despite mass lockdown'
ET News | Local Language | News
Silicon Valley is increasingly concerned about the rapid progress of Chinese artificial intelligence (AI), despite US efforts to restrict the export of advanced technology to China. Recent reports indicate that Chinese AI companies, particularly DeepSec, are nearing parity with their US counterparts. DeepSec's AI model has gained significant traction, ranking among the top 10 globally in popularity and performance, highlighting the challenges of US restrictions on China's AI momentum.
Samsung overtakes Intel as the world's top semiconductor provider
Chosun Ilbo | English | News
Samsung Electronics is poised to reclaim its title as the world's top semiconductor supplier in 2024, overtaking Intel, according to market research firm Gartner. This turnaround is significant, as Samsung has faced declining profitability in its DRAM and NAND flash products. Notably, Gartner's ranking excludes TSMC, the largest semiconductor contract manufacturer.
SK hynix names Ryu Sung-soo as new CEO of its US unit
Korea Times | English | News
Korean chip giant SK hynix has appointed Ryu Sung-soo as the new CEO of its U.S. unit, SK hynix America, succeeding Kim Ju-seon. The announcement was made via the company’s social media, highlighting Ryu's significant contributions to memory and semiconductor solutions, particularly in high bandwidth memory (HBM) technology and DRAM product planning.
Chip architecture giant Arm’s possible fee hike threatens Samsung
Korea Times | English | News
Samsung Electronics is grappling with challenges in its smartphone application processor (AP) business, as Arm, which dominates over 90 percent of the global AP architecture market, may raise its royalty fees by up to 300 percent. This spike poses significant risks to Samsung's Exynos series, heavily reliant on Arm's intellectual property. Increased production costs for Exynos could further strain Samsung’s already troubled foundry operations.
Taiwan
〈蛇年景氣展望〉記憶體今年Q1仍低迷 Q2起緩步復甦
Yahoo News Taiwan | Local Language | News
Demand for DRAM and NAND memory has been lower than expected since mid-2022, except for AI cloud applications. This decline has led to rising inventory levels and oversupply, resulting in price drops. A further decline in demand and prices is expected in Q1 2025 due to seasonal factors and high inventories, with a gradual recovery anticipated in Q2.
AI時代 企業須正視資料治理
In the AI era, companies must pay attention to data management
Yahoo Finance | Local Language | News
As enterprises increasingly depend on data in the AI era, strong data governance is vital for effective management and sustainable growth. By standardizing data use and ensuring quality, companies can enhance the overall value of their data. Various data maturity models serve as benchmarks for assessing data governance practices.
美科技財報周 牽動台積電、鴻海等後市 台股風向球
United Daily News | Local Language | News
Taiwan's Golden Dragon stock has surged 30% year-on-year, nearing profitability for the third consecutive year. Major technology companies, including ASML, Microsoft, Meta, Tesla, Apple, and Intel, will announce their financial results this week, which are expected to influence Taiwan's stock market and key players like Taiwan Semiconductor Manufacturing Co. (TSMC) and Hon Hai.
日本經產大臣訪台積電熊本廠 盼加速評估增加投資
Central News Agency | Local Language | News
中國「DeepSeek」威脅美國AI主導地位？遭爆擁5萬輝達H100晶片
Does China’s “DeepSeek” threaten U.S. AI dominance? Exposed to possessing 50,000 Nvidia H100 chips
NOWnews | Local Language | News
Chinese AI company DeepSeek has launched its open-source large language models, DeepSeek V3 and DeepSeek-R1, which are drawing interest for their performance that rivals OpenAI's models and outperforms Meta's Llama. Notably, the founder of Scale AI, Alexander Wang, revealed that DeepSeek has secured 50,000 Nvidia H100 AI chips—restricted from export to China—through unclear channels.
美光HBM出貨量超預期 HBM4開發中、預計2026大規模量產
ETtoday | Local Language | News
Micron has reported a positive outlook for its High Bandwidth Memory (HBM) segment, with current shipments exceeding expectations. Lu Donghui, chairman of Micron Taiwan, announced that operations at a new advanced packaging facility in Singapore will begin in January 2025. The company is working on its HBM4 technology, which is set for large-scale production in 2026.
Cognitive Asia covers AI, semiconductors, and cloud computing-related issues for South Korea, Japan, China, Taiwan, India, and Vietnam.
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