Trump's Chip Curbs On China To Be Counterproductive, Says Jefferies' Christopher Wood

Christopher Wood from Jefferies has voiced concerns that the United States' restrictions on China's access to advanced semiconductor technology may be counterproductive. This commentary comes in relation to Donald Trump's ambition to position the U.S. as an "artificial intelligence superpower." In a recent analysis, Wood highlights the repercussions of the DeepSeek incident, asserting it will be a landmark moment in the U.S. stock market, akin to Microsoft's investment in ChatGPT.

The Impact of DeepSeek on the AI Landscape

DeepSeek, a Chinese AI startup founded by Liang Wenfeng, has recently gained attention after being banned by the United States Navy for security and ethical concerns. Wood emphasizes that this affair may shift the global narrative surrounding AI. He points out that DeepSeek's latest AI model operates comparably to those offered by major Western tech firms but at a significantly lower cost. This development has raised eyebrows, leading to substantial declines in companies like Nvidia.

Challenges in AI and Semiconductor Markets

In discussing the state of the AI industry, Wood refers to Trump's decision to relax critical AI regulations on his first day in office, aimed at fostering private investment. Despite past restrictions on semiconductor exports, a notable percentage of banned graphics chips still ended up in China last year through second-hand markets. Wood notes that while decreasing access to AI technology could drive demand for computing power, it does not necessarily indicate that semiconductor stocks will rebound, particularly due to pricing power issues.

The current market dynamics suggest that actively purchasing tech hardware is viewed more favorably than selling it, evident in the recent performance metrics of semiconductor companies versus major hyperscalers. Wood also warns of a broader disruption posed by advances in AI technologies, a situation underscored by the explosive growth of DeepSeek's AI assistant, which has surged in popularity across many regions, particularly India.

A Look Ahead

As the global competition for dominance in AI and semiconductor technologies intensifies, the implications of initiatives such as Trump's chip curbs will continue to be scrutinized. The potential for a new player like DeepSeek to rise from emerging markets, particularly with India's growing tech capabilities, remains significant. Such developments signal a transformative period in both technological advancement and market strategy.

Technology, China, Semiconductors