DeepSeek’s HBM claim rattles Samsung Electronics and SK Hynix

SK Hynix and Samsung Electronics shares fell 2.2% and 3.5% respectively after DeepSeek reduced high-bandwidth memory requirements in its AI models, raising demand concerns. Despite cheap valuations and strong earnings, volatility persists. Investors see this as a short-term setback, with long-term demand expected to rise from other AI models.

Samsung Electronics and SK Hynix shares fell over 3% after DeepSeek unveiled its V4.1-Flash AI model, which significantly reduces memory requirements. The model uses 890 bytes of cache per token, a quarter of its predecessor's usage. DeepSeek's innovation could impact memory demand, affecting companies like Micron and SanDisk. DeepSeek is preparing for a Shanghai listing and recently raised funding at a high valuation.

Hedge fund Situational Awareness, which suffered massive losses in July, has resumed trading by spending hundreds of millions on call options for AMD, SanDisk, and other AI-related companies. According to Nomura, a large investor paid at least $315 million in premiums for options on these and other assets. The fund's founder, Leopold Aschenbrenner, previously achieved high returns with aggressive AI supply chain bets but faced a liquidity crisis in July.

South Korea's KOSPI index fell 1.76% to 6,909.91 as Samsung Electronics and SK Hynix dropped over 3% each. The decline followed DeepSeek's announcement of an AI model requiring less high-bandwidth memory, raising concerns about demand for HBM chips. Both companies are down over 25% from their all-time highs, with high volatility affecting the KOSPI.

Samsung Electronics and SK Hynix shares fell over 3% in Seoul after DeepSeek introduced an AI model using less high-bandwidth memory (HBM), raising concerns about future memory chip demand. Micron and SanDisk shares remained positive. DeepSeek's V4.1 Flash model reduces HBM and solid-state storage needs, potentially impacting memory industry growth. Samsung and SK Hynix shares are down over 25% from record highs.

Samsung responded to Apple's $1,999 iPhone Duo launch with a social media campaign highlighting its seven-year lead in foldable smartphones. Samsung's posts, which gained millions of views, teased Apple's late entry and similar design. Apple's foldable iPhone starts at $2,460 in Korea. Counterpoint Research projects Apple to capture 25% of the foldable market, while Samsung is expected to hold 38%.