Markets NVDA +3.65% JUL 08, 2026

DeepSeek chip shock, Samsung AI miss send PHLX Semis down 5.7%

Reuters reported DeepSeek is building its own inference chip hours before Samsung's 19-fold Q2 profit jump underwhelmed the AI bar; MU fell 4.7%, SMH lost 3%+.

BY HENLEY MARRAST · MARKETS DESK

The Philadelphia SE Semiconductor Index tumbled 5.7% to a four-week low on Tuesday, on track to shed roughly $800 billion in market value in a single session after two stories collided inside the same news cycle: a Reuters exclusive that DeepSeek is building its own inference silicon, and a Samsung Electronics Q2 print that grew operating profit 19-fold and still managed to disappoint.

Reuters, citing three people familiar with the matter, reported that the Chinese AI startup is designing a chip optimized for inference rather than training, intended to reduce its dependence on Nvidia and Huawei. The same sources tie the effort to a first outside funding round of about $7 billion at a $52 billion to $59 billion valuation. Nvidia slipped about 1.6% in premarket. The VanEck Semiconductor ETF fell more than 3%, Micron closed down 4.7%, and AMD, Marvell and KLA all traded lower.

“Nvidia is at zero in China and staying there,” said Richard Windsor of Radio Free Mobile, who also cautioned that DeepSeek has “almost no chance of selling silicon outside of China unless it gets access to leading edge manufacturing.”

That’s the frame the tape is trading on. Every large model house is now visibly attempting to route around Nvidia: DeepSeek in Hangzhou, OpenAI in Santa Clara. In June, OpenAI unveiled Jalapeno, its first custom inference chip, co-developed with Broadcom. None of these programs displace CUDA next quarter. All of them chip at the terminal-value story that got semis to their June highs.

Samsung supplied the second leg. A 1,800% guided jump in operating profit was, by the market’s read, still not enough evidence of high-bandwidth memory dominance. Shares fell 8% in Seoul, touching down 10% intraday. The Kospi lost about 5%. SK Hynix, which drops onto the Nasdaq Friday in a $28 billion listing, second only to SpaceX, fell roughly 6% ahead of its debut.

The S&P 500 lost 0.5% to 7,503.85 and the Nasdaq Composite fell 1.16% to 25,818.69, with Brent above $75 and WTI clearing $71 adding a macro layer underneath. The pattern rhymes with January’s DeepSeek-R1 selloff: the AI trade is priced for an Nvidia monopoly, and it re-rates every time a customer picks up a soldering iron.

Sources

About the author

Henley Marrast

MARKETS DESK

Henley Marrast covers AI-equity flow, accelerator demand, and earnings prints for AI Sheet Report. She leads coverage of the public AI complex from the New York markets desk, with a focus on the daily tape and quarterly results. She has been writing about technology markets for several years.