DeepSeek’s V3.1 model emerges as ‘key pillar’ for China’s chip self-sufficiency

DeepSeek’s recently released V3.1 AI model has unleashed fresh optimism about the prospects of China developing advanced artificial intelligence semiconductors, according to analysts.

The Hangzhou-based start-up’s updated model, which supports an innovative data format called UE8M0 FP8, was “ushering in a booming domestic computing power chain”, Huatai Securities analysts said in a research note on Tuesday.

That architecture showed that the synergy between mainland-designed software and chips would realise significant results, according to the report.

FP8, known as floating-point 8, is a format that reduces precision to speed up AI training and inference by using less memory and bandwidth. UE8M0, another 8-bit format, is said to increase training efficiency, which reduces hardware requirements by cutting memory use by up to 75 per cent.

The V3.1’s data format represents “a key pillar for building an independent and controllable AI ecosystem” for China, as the country establishes a “healthy ecosystem for the coordinated development of hardware, software and applications in the field of AI computing”, according to a report on Sunday by Haitong Securities.

The analysts’ assessments reflected the growing efforts in the country’s AI sector and semiconductor industry to push forward Beijing’s tech self-sufficiency agenda amid US export restrictions on China and rising geopolitical tensions.