In the rapidly evolving landscape of artificial intelligence (AI), every significant technological milestone holds the potential to transform entire industries and redefine future trajectoriesThe recent introduction of DeepSeek, a revolutionary open-source model, has garnered attention for its remarkably low operational costs combined with high performance, acting like a stone cast into a tranquil lake—stirring ripples that challenge and create unprecedented opportunities within the data center supply chain.

DeepSeek achieved forefront AI model performance by harnessing just around 2,000 H800 GPUs, a feat that astonishes many within the tech communityBy dramatically reducing the training costs typically associated with AI models, it dismantles the long-held assumption that such expenses inevitably remain highThis breakthrough is akin to a sharp scalpel, cutting close to the core of the data center supply chain, prompting profound reflections on the future direction of the industry.

A recent report from Morgan Stanley suggests that the impact of DeepSeek could begin reshaping the data center supply chain landscape as early as 2026. In this upcoming transformation, various segments of the supply chain are anticipated to experience differentiated effects, with the fortunes of diverse businesses hanging in the balance.

In the short term, the investment strategies of major tech companies may not see an immediate overhaul

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For instance, Meta has recently made headlines by announcing an ambitious capital expenditure plan for 2025, projected between $60 billion and $65 billion, a stark increase compared to its 2024 figures ranging from $35 billion to $40 billionThis data underscores that tech giants, despite the arrival of DeepSeek, remain resolute in their strategic investments in AI, with no indicating shift in their capital spending plansResearch from Morgan Stanley corroborates this point, indicating that GPU deployment strategies have yet to undergo significant variationsHowever, if any adjustments to these plans were to materialize, they are likely to manifest no sooner than 2026.

The ripple effects of DeepSeek's breakthroughs will vary across different sections of the supply chainThe most immediate repercussions are likely to hit companies linked to GPU supply chains and those tied to Nvidia, particularly businesses catering to Tier 1 hyperscale data centers

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As the DeepSeek model gains traction, the demand dynamics for GPUs within these leading data centers could change, posing risks of diminished business volumes and shrinking market shares for these enterprisesIn contrast, suppliers servicing Tier 2 cloud service providers and enterprise clients may find themselves less adversely impacted.

For manufacturers of servers and components, a potential decrease in GPU prices could present beneficial prospectsA more competitive market might lead to reduced costs for GPU components, easing material expenses and improving profit margins—while creating favorable conditions for growthOn the other hand, the ASIC (Application-Specific Integrated Circuit) solution providers might uncover fresh market opportunitiesAs AI technology further develops and application scenarios diversify, the advantages of ASIC in specific domains may become more pronounced, with DeepSeek's advancements potentially accelerating this trend and expanding market avenues for ASIC solution providers.

According to Morgan Stanley, four potential scenarios might emerge in the market under DeepSeek's influence:

• Baseline Scenario: In this scenario, top-tier hyperscale data centers would continue their construction plans as outlined

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  Despite DeepSeek introducing new technological changes, with GPU prices remaining stable, procurement decisions within the data centers are not expected to undergo significant transformationsNonetheless, from a broader industry perspective, the supply chain dynamics have quietly begun to shiftThe unique technological advantages and market positioning of ASIC supply chain firms may allow them to outperform GPU suppliersHowever, until the complete ramifications of DeepSeek become clear, the entire sector’s valuations may come under some pressure as investors remain watchful, waiting for more conclusive developments.

• Optimistic Scenario: Should GPU prices decline while data center capital expenditures hold steady, data centers may then procure a greater volume of hardwareThis would send a positive signal across the entire data center supply chain, particularly benefiting downstream enterprises involved in server assembly
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  An increase in hardware procurement could lead to heightened order volumes, thereby improving production scales and profitabilityAdditionally, a drop in GPU prices may stimulate further demand growth in the market, propelling industry expansion.

• Normalization Scenario: From a medium to long-term perspective, the reduction in AI training and inference costs may emerge as a significant driving force for industry growthWith the proliferation of low-cost, high-performance models like DeepSeek, barriers to AI deployment will diminish, allowing more enterprise clients to develop their AI capabilitiesSuppliers targeting the enterprise market, such as Gigabyte, Lenovo, and Asus, may stand to gain substantially from this trend, leveraging their vast experience and expansive customer bases to capture a larger share of new market opportunitiesThe demand for AI technology among enterprise clients will extend beyond the realm of large tech companies, gradually reaching small and medium enterprises, which will generate fresh growth momentum for the entire AI ecosystem.
• Disruption Scenario: Should DeepSeek's model gain widespread adoption, there could be a re-evaluation of computational demands across the industry

  

  The pursuit of maximum computing power might no longer dominate corporate objectives; instead, organizations and data centers could increasingly prioritize comprehensive performance, cost-effectiveness, and suitability to application scenariosIn such a case, ASIC solutions might gain greater recognition in the marketCompanies like Wei Ying and Ye Cheng, concentrating on the ASIC sector, could see new opportunities arise, as their technologies and products get applied and promoted across broader markets, steering the entire industry toward diversification and heightened efficiency.

The advent of DeepSeek's next-generation open-source model undeniably heralds a profound transformation within the data center supply chainBusinesses across the board will confront diverse challenges and opportunities in this shiftDistilling one's position within this transformative wave, seizing opportunities, and effectively addressing challenges will be paramount considerations for every enterprise