Micron Technology, Inc. (NASDAQ:MU) shares plummeted 6.9% in pre-market trading on Monday, as concerns mounted over future demand for AI chips and memory products used in AI systems. The sell-off was triggered by reports about Chinese AI startup DeepSeek, which claimed to have released a powerful AI model that cost only $6 million to build using less-powerful chips.
If DeepSeek's claims are true, it could potentially undermine the demand for expensive AI chips and high-bandwidth memory (HBM) chips produced by companies like Nvidia and Micron. Analysts have warned that DeepSeek's progress raises questions about the computing power needed to develop AI systems, a key driver for AI stocks and related memory chip demand.
The news sent shockwaves through the semiconductor and technology sectors, with Nvidia, Broadcom, TSMC, ARM, and other chip stocks tumbling in overnight trading. ASML Holding NV, a crucial supplier of chipmaking equipment, saw its shares sink as much as 8% amid fears that DeepSeek's advances could threaten Western technological dominance in the AI field.
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