Finance
ASML CEO makes case that DeepSeek is positive for chip demand
Published by Global Banking and Finance Review
Posted on January 29, 2025
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Published by Global Banking and Finance Review
Posted on January 29, 2025
By Toby Sterling and Nathan Vifflin
AMSTERDAM (Reuters) - Computer chip equipment maker ASML's CEO on Wednesday made the case that the advent of efficient AI models such as one China's DeepSeek has launched is a net positive for chip markets.
Christophe Fouquet said that perceptions of AI spending are skewed by the massive investments being made by "hyperscalers" - companies such as Google, Meta and Microsoft - that are spending billions of dollars to build data centres packed with advanced chips.
"If you look at the number of chips related to that, it's pretty small in fact," Christophe Fouquet said, speaking after ASML reported earnings that featured a robust inflow of new bookings based largely on strong AI demand.
Fouquet was asked by journalists about the impact of DeepSeek's AI product launch, which wiped billions of dollars of tech share prices earlier this week.
"We believe that when it comes to the size of our business, the demand will come more from the use of AI" than training large AI models, he said.
He cited uses for AI in applications that need chips ranging from phones to cars to robotics and industrial applications.
"If you want to have an AI chip on your phone, the cost of those chips has to be a fraction of what maybe the hyperscaler can pay for it."
"If the cost doesn't go down, you may continue to sell a few very expensive chips and make a few people very happy, but you will not basically bring this technology to the masses and the volume will remain small."
"I don't know exactly what DeepSeek can or cannot do, but I say again, anything that will drive costs down is good news for ASML on the long term," Fouquet said.
Analyst Sara Russo of Bernstein said she agreed with the CEO's viewpoint, but she also highlighted that DeepSeek's impact is only just starting to be felt and ASML is a supply chain company.
"They will need to see how the AI models and applications develop, how that drives chip workloads, how that changes chip demand, and how that changes chip manufacturer demand," she said.
(Reporting by Toby Sterling. Editing by Jane Merriman)