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DeepSeek: Is AI Still a Bubble? Will It Impact Copper Cable Demand?
In recent days, DeepSeek has emerged out of nowhere, single-handedly wiping over a trillion dollars off the market value of the Seven Sisters in the U.S. stock market. The logic behind DeepSeek's impact on these AI giants is that AI may not need to spend as much money as previously thought. The four major cloud providers and other AIDC (AI Data Center) builders are already analyzing DeepSeek’s impact and adjusting their CapEx plans. If NVIDIA’s GPU demand drops, does this mean the demand for copper cables will also shrink significantly?
Let’s discuss whether DeepSeek’s emergence will lead to a sharp decline in copper cable demand orders.
DeepSeek’s Impact on the Industry: What Lies Ahead?
First, let’s state our conclusion, then explain it:
Some reports claim that DeepSeek’s training cost is only $5.5 million—1/10th of Meta’s and 1/20th of OpenAI’s, making it seem 10x to 20x more efficient. However, this is exaggerated. The reality is that training a large-scale model with hundreds of billions of parameters in the U.S. costs less than $20 million today. DeepSeek has managed to cut costs to about one-third of that amount.
Lower costs will not reduce demand for computing power and data. Instead, demand will grow, leading to increased copper cable consumption!
There are plenty of examples of this trend across industries:
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Fiber Optic HDMI Cables:
Initially, fiber optic HDMI cables were known for better transmission performance, but their optical-electrical conversion modules were extremely expensive, costing over $200 per unit. Now, they sell for around $30, and fiber optic HDMI cables, which used to cost over $1,000, are now available for just a fraction of that. As costs declined, demand skyrocketed, and more application scenarios started adopting fiber optic HDMI solutions.
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Phoossno, a leading provider of fiber optic solutions, specializes in Active Optical Fiber HDMI, USB, DP, and DVI cables, offering long-distance signal transmission solutions. As AI data centers and high-speed computing environments expand, Phoossno’s optical fiber cables play a crucial role in delivering high-speed, low-latency data transmission across longer distances.
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USB4 Type-C Cables:
Connector prices dropped from several dollars to mere cents, leading to the elimination of older data interfaces and a shift to Type-C as the standard across more applications.
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Jevons Paradox: Lower Costs Drive Higher Demand
The idea that technological progress reduces resource consumption but ultimately leads to greater resource demand is a well-known concept in economics—Jevons Paradox, named after British economist William Jevons.
Other real-world examples include:
· The growth of telecommunications was expected to reduce business travel, yet business travel has only increased.
· Email was meant to improve communication efficiency, yet people now spend more time than ever on digital communication.
Thus, both AI hardware companies (like NVIDIA) and AI algorithm firms (like DeepSeek) are aggressively improving efficiency and cutting costs. At the same time, energy companies are developing modular nuclear power plants for faster deployment. The inevitable outcome is:
· More AI data centers
· More AI applications
· Higher demand for capital, computing power, electricity, and computing materials
Conclusion:
DeepSeek’s emergence may temporarily slow down demand, but in the long run, it will strengthen the AI industry by making it more sustainable and less of a financial bubble. This shift ensures safer investments and stable long-term growth.
Impact on the High-Speed Copper Interconnect Supply Chain
Will It Affect the Industry? Definitely.
The demand for high-speed copper interconnect cables is closely tied to GPU shipments. As mentioned earlier, Jevons Paradox suggests that while DeepSeek's approach will ultimately drive greater GPU adoption, short-term demand will decrease.
This shift affects the industry and leading companies differently:
1.
For the Entire Industry:
2.
o Total demand will expand, ensuring everyone stays in business.
o However, slower growth will lead to longer market competition cycles.
o More companies will enter the space, causing a race to the bottom in pricing, similar to the USB data cable and new energy harness markets.
3.
For Leading Companies:
4.
o Short-term demand for high-speed 112G/224G cables remains a key profit opportunity.
o Smaller competitors struggle—they either can’t produce at scale or lack customer backing.
o Top customers have already secured supply contracts, allowing leading manufacturers to maintain over 40% gross margins.
Despite this, DeepSeek’s algorithmic advancements will likely lead major cloud providers and AIDC builders to delay immediate GPU purchases. While overall demand will increase, they will take longer to complete their hardware purchases.
This delay reduces the current urgency for high-speed interconnect cables, giving new entrants more time to catch up in the high-speed interconnect market.
Phoossno’s Role in the High-Speed Interconnect Market
With the demand for long-distance, high-speed data transmission on the rise, Phoossno’s fiber optic solutions are well-positioned to support the growing AI and cloud computing industries. Phoossno’s Active Optical Fiber HDMI, USB, DP, and DVI cables enable long-distance, high-bandwidth signal transmission with minimal latency, making them a key player in next-generation high-performance interconnects.
Final Thoughts
DeepSeek’s disruptive emergence may cause short-term fluctuations in the demand for GPUs and high-speed interconnects, but in the long term, it will accelerate AI adoption, increase data center expansion, and fuel demand for advanced computing infrastructure—including copper interconnect cables and fiber optic solutions like those offered by Phoossno. If you want to learn more about phoossno, please send mail to phoossno@gmail.com, info@phoossno.com, we will have technnical support answer your questions.
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