A new chatbot released by Chinese start-up DeepSeek has caused U.S. tech giant Nvidia's stock to plunge around 17% on Monday alone. The Chinese company's innovation suggests Nvidia's chips may be less crucial to the future of AI than previously thought, which could threaten Taiwan's TSMC, which makes most of the world's most advanced semiconductors.
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00:00Plunging shares for U.S. tech giant NVIDIA, which sells specialized computer chips crucial
00:08to building A.I. systems, powering everything from self-driving cars to chat GBT.
00:17After growing rapidly for years on the back of a global A.I. boom, the company's shares
00:21dropped around 17 percent on Monday alone.
00:26Why?
00:28Because of a Chinese A.I. startup called DeepSeek releasing its latest chatbot app, which is
00:33rocking the industry because of the way it was made.
00:36To create a functional A.I. model, the company said it used thousands fewer chips than other
00:40companies at a fraction of the cost, which could threaten NVIDIA's business, suggesting
00:45its chips may be less crucial to the future of A.I. than once thought.
00:49It is one of the things that I think people are really wondering is a company like NVIDIA,
00:53where they were viewed as almost having a monopoly or a really, really strong moat
00:59around the whole chip and artificial intelligence ecosystem, that maybe that moat isn't quite
01:06as strong as what people originally thought.
01:11In challenging the idea that building more powerful A.I. models requires more specialized
01:15chips and more money, DeepSeek's chatbot is also showing that building A.I. is possible
01:19for smaller companies, not just the world's largest.
01:22In response, U.S. President Donald Trump has urged American companies to find ways to compete.
01:29The release of DeepSeek A.I. from a Chinese company should be a wake-up call for our industries
01:37that we need to be laser-focused on competing to win because we have the greatest scientists
01:42in the world.
01:43Even Chinese leadership told me that.
01:48The development has also driven down stocks of TSMC, the Taiwanese company that is the
01:52world's leading chipmaker, which could in turn impact Taiwan's overall economy.
02:00Trump has also said he will place tariffs on semiconductor imports to improve domestic
02:04production, telling the U.S. House Republicans that he may impose 25 percent, 50 percent
02:09or even 100 percent tax on Taiwan's chips, which would directly hit TSMC because it manufactures
02:15the critical technology for many U.S. companies.
02:20But at least one semiconductor industry analyst says DeepSeek has actually spent significantly
02:24more money on this model than claimed.
02:27The stock market may simply be responding to so much uncertainty around NVIDIA's future,
02:31but what's not in question is the fear and focus on A.I. technology.
02:36Dolphine Chen and Kadence Cuaranta for Taiwan Plus.