TAIPEI (Taiwan News) — Taiwan's tech sector is navigating the impact of DeepSeek's emergence, with hardware companies facing challenges while software developers see new opportunities.

The emergence of DeepSeek may signal a decline in demand for hardware suppliers such as Quanta, Wistron, and Inventec, anue reported. The company’s recent launch of AI model DeepSeek-v3, developed at a reported cost of US$5.6 million (NT$184 million), has drawn attention for achieving results comparable to those of major tech giants at a fraction of the cost.

DeepSeek’s reported low-cost AI model could challenge reliance on high-end chips, potentially weakening demand for Nvidia’s advanced processors. This shift could ripple through Taiwan’s AI server supply chain, which has thrived alongside Nvidia’s growth.

AI server stocks have shown signs of weakness since trading resumed on Monday after the Lunar New Year, with Quanta Computer reaching its daily limit down and extending its decline to new lows. Wistron and Inventec have also continuously hit new lows.

However, DeepSeek’s rise is not entirely negative. Its low-cost, high-performance model combined with its open-source approach could spur the growth of AI applications worldwide.

This could increase demand for AI end-user applications, benefiting companies like MediaTek in mobile devices and Acer, Asus, and MSI in computers. Additionally, software companies stand to benefit from DeepSeek’s open-source policy, enabling them to develop AI applications more affordably.

Fortune Information Systems, Metaage, Dimension Computer Technology, Azion, and Ares have all reached their daily limit-up since Monday, with some hitting the limit for two consecutive days. While AI hardware companies face challenges, software concept companies are seeing strong performance, with opportunities for growth in the evolving AI landscape.