The Rise of DeepSeek: "AI Semiconductors, Nvidia's Dominance Ends... China Export Routes Must Be Secured"

DeepSeek Reshapes AI Semiconductor Market...
Positive Outlook for Korean Semiconductor Industry
Concerns Grow Over U.S. Export Restrictions Expanding to General-Purpose Chips

Reuters Yonhap News

As the competition for artificial intelligence (AI) technology supremacy between the United States and China intensifies, the rise of Chinese AI startup DeepSeek is signaling new changes in the AI semiconductor market. DeepSeek is shaking up the industry by developing AI models capable of competing with U.S. big tech AI services using mid-range AI semiconductors.

In particular, by threatening Nvidia's monopolistic position, there is a possibility that the AI semiconductor market will expand from cutting-edge semiconductors to the general-purpose semiconductor market. While the expansion of the AI semiconductor market is seen positively by the Korean semiconductor industry, concerns have also been raised that U.S. export restrictions on China could extend to general-purpose semiconductors, which would act as a negative factor.

DeepSeek Signals Restructuring of AI Semiconductor Market... Expansion from Cutting-Edge to General-Purpose AI Semiconductors

DeepSeek is breaking the conventional notions of the existing AI industry. While the AI market was previously a high-priced market centered on cutting-edge semiconductors dominated by OpenAI and Nvidia, DeepSeek has proven that AI models can be effectively operated without high-performance chips.

An Gi-hyun, Executive Director of the Korea Semiconductor Industry Association, evaluated, “The emergence of DeepSeek heralds the growth of the entire AI semiconductor market, which is a positive change for the Korean semiconductor industry, which focuses on DRAM.”

The expansion of the AI market is directly linked to the surge in demand for graphics processing units (GPUs). Nvidia, which has monopolized the GPU market necessary for AI model training and inference, has so far emphasized high performance and efficiency while selling high-priced products.

However, it is reported that Nvidia’s H800 chip, which was released with reduced performance for export to China, was used in DeepSeek’s AI model training, indicating signs that the AI hegemony centered on OpenAI and Nvidia may be shaken.

Korean Semiconductor Industry Adjusts Strategy Amid ‘AI Semiconductor Hegemony Shift’

The Korean semiconductor industry is positively evaluating the emergence of DeepSeek. With the realization of low-cost AI training models, expectations are growing that new opportunities will open up for the Korean semiconductor ecosystem, centered on memory semiconductors.

A senior official from an AI semiconductor design company said, “The fact that DeepSeek has realized a low-cost AI training model will lead to an expansion of AI infrastructure and increased demand for semiconductor chips and packaging for data centers,” adding, “As competition intensifies, supply will also increase, which is good news for the Korean semiconductor industry.”

Major semiconductor companies also view DeepSeek’s emergence as an opportunity for market expansion. An industry insider explained, “From the perspective of the memory semiconductor industry, the growth of the AI semiconductor market is an important signal,” and added, “The H800 chip is not entirely low-spec, so it is expected to secure a certain sales volume.”

‘Forced Choice’ Pressure Amid U.S.-China AI War... Korean Semiconductor Industry Must Maintain 30% Sales to China

While the expansion of the AI semiconductor market base is a positive factor, if U.S. export restrictions on China extend from cutting-edge semiconductors to general-purpose semiconductors, domestic companies’ exports to China could face further limitations.

Currently, Samsung Electronics and SK Hynix’s sales to China account for about 30%. Samsung Electronics’ sales to China exceeded 30% in the third quarter of last year, and SK Hynix is also approaching 30%.

A representative from a major semiconductor company emphasized, “The U.S. is currently regulating exports to China mainly for cutting-edge semiconductors, but if the restrictions expand to older semiconductors, domestic semiconductor companies could completely lose the important Chinese market,” and stressed, “Measures to respond to this must be prepared.”

U.S. semiconductor sanctions against China are likely to be further strengthened in the future. A business community official predicted, “The Trump administration will try to block all semiconductor supply chains that could contribute to China’s AI growth,” and said, “The rise of DeepSeek is a strong warning from the U.S. perspective, and it is highly likely that the U.S. will strongly demand Korea’s participation in pressuring China.”

He advised, “The Korean government and semiconductor industry must join forces to proactively prepare countermeasures,” and added, “It is necessary to diversify export strategies and quickly seek ways to maintain cooperation with China.”