Global AI-related stocks are wobbling after DeepSeek in China rolled out an artificial intelligence (AI) model that sharply cuts price and memory use. Concerns are growing that semiconductor demand could slow, as it even reduces usage of High Bandwidth Memory (HBM) and solid-state drives (SSD) needed to run AI models.
On the 11th, Bloomberg reported that DeepSeek unveiled its new AI model "V4.1 Flash" the previous day and claimed it outperformed major rivals including Moonshot's "Kimi K3" in some metrics.
V4.1 Flash activates only 800 million to 1.6 billion of the total 552 billion parameters during actual inference. The price is just $0.15 per 1 million tokens at the lowest.
However, while it beat competing models on some coding and AI agent metrics, it is still seen as falling short of the top-tier models from Anthropic and OpenAI.
DeepSeek sees models that lead on price-to-performance as competitive in the future AI market. Starting on the 14th, it plans to phase out the existing "V4-Pro" and automatically switch all inference tasks to V4.1 Flash.
DeepSeek said this model in particular reduced the amounts of HBM and SSD required. According to DeepSeek, it drastically shrank the size of the "KV cache," a space that temporarily stores the results of previous computations each time the AI generates a sentence.
The KV cache required to process a single character (token) is 890 bytes, one-fourth that of the previous V4 Flash model. The SSD capacity needed for long-term storage was also cut to one-eighth of the previous level.
Among the total 40 neural network layers, the front part was designed to serve as an "encoder" that compresses and summarizes documents, and the back part as a "decoder" that generates outputs based on that information. It also lowered memory usage by having multiple layers share the cache.
Chinese IT outlet Xinlang Keji (Sina Technology) called the model a "memory killer" and said the API call expense for corporations has dropped to a "1-yuan-range people's price."
Meanwhile, on the previous day in New York, Micron Technology and SK hynix American depositary receipts (ADR) at one point fell more than 5%. The fallout carried into Korea's market on the day, with Samsung Electronics and SK hynix shares down 2%–3%.
Shares of Chinese-language AI corporations including Minimax Group and Z.AI also plunged more than 8% in Hong Kong trading, and Alibaba slid more than 2%.
AI model analysis firm Artificial Analysis described the competitive landscape—where survival is difficult without clear differentiation in price or performance—as a DeepSeek-driven "death zone."
Bloomberg Intelligence said, "With low technical barriers speeding up commoditization, it is hard for any corporations to have pricing power."