ABB Ltd expects increased demand from the data center market for its electrification products, CEO Morten Wierod said on Thursday, despite the promise of lower-energy artificial intelligence (AI) models from Chinese start-up DeepSeek (深度求索).
The DeepSeek chatbot, a low-cost alternative to US rivals, sparked a tech stock selloff on Monday as its free AI assistant overtook OpenAI's ChatGPT on Apple's App Store in the US.
The news prompted investors to dump tech stocks on worries that DeepSeek's model — which uses far fewer chips at data centers used to power AI — could threaten the dominance of advanced chipmakers like Nvidia Corp.
Photo: Arnd Wiegmann, Reuters
Suppliers to data centers also lost ground, with ABB's stock shedding nearly 6 percent on Monday.
Wierod said DeepSeek's popularity had "raised eyebrows and created a lot of uncertainty in the market.
"We have talked with our large partners and customers to see how this would impact their capex plans," he told reporters after the Swiss power technology and automation group reported fourth-quarter results.
"And the answer we receive ... is that it does not really affect the plans that are already in place."
Orders climbed to US$8.1 billion in the final three months of last year, a 7 percent increase from the same period a year earlier on a comparable basis, the Zurich-based company said. Net income rose 7 percent to US$987 million from US$921 million a year earlier, it said.
ABB has been a beneficiary of the increase in data centers, a market which Fortune Business Insights forecast to grow by nearly 12 percent per year to reach US$685 billion by 2032.
ABB's data center-related orders increased 23 percent per year on average in 2019-2023, and even faster last year to make up 15 percent of its electrification business, from 12 percent in 2023 and 8 percent in 2022.
Wierod declined to give a forecast for this year, but was confident about future demand, adding that he saw potential for the company in China.
ABB said it was well placed to benefit from the need to reduce the massive energy consumption of data centers as well as the US$500 billion private sector investment in AI infrastructure, Stargate, announced by US President Donald Trump last week.
It says its motors and variable speed drives can reduce electricity consumption by up to 60 percent, while its uninterrupted power supply products run at 97.4 percent efficiency when converting electricity.
"The need for data center and AI will be very strong in the coming years," Wierod said. "I have no doubt."
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