ABB CEO Morten Wierod stated on Thursday that despite DeepSeek's commitment to providing low-energy AI models in China, the demand for its electrified products in the data center market is expected to increase.
DeepSeek, a low-cost alternative to American competitors, sparked a tech stock sell-off on Monday as its free AI assistant surpassed OpenAI's ChatGPT in the US Apple App Store.
This news prompted investors to sell off technology stocks as they were concerned that DeepSeek's model - which uses much fewer chips in data centers to power AI - could threaten the dominant position of advanced chip manufacturers such as Nvidia.
Data center suppliers also fell, with ABB's stock dropping nearly 6% on Monday.
Wierod stated that DeepSeek's popularity has caught people's attention and caused a lot of uncertainty in the market.
We have had conversations with our large partners and customers to understand how this will affect their capital expenditure plans, "he told reporters after ABB reported its fourth quarter performance.
The answer we received... is that it will not really affect the plans that are already in place.
ABB has always been a beneficiary of data center growth, and Fortune Business Insights predicts that the market will grow at a rate of nearly 12% annually, reaching $685 billion by 2032.
ABB's data center related orders are expected to grow at an average annual rate of 23% from 2019 to 2023, and even faster by 2024, accounting for 15% of its electrification business, up from 12% in 2023 and 8% in 2022.
Wierod declined to provide a forecast for 2025, but is confident in future demand and added that he sees the company's potential in China.
ABB stated that it is fully capable of benefiting from the demand to reduce large-scale energy consumption in data centers and the $500 billion private sector investment in artificial intelligence infrastructure announced by US President Donald Trump last week.
The company states that its motors and variable speed drives can reduce power consumption by up to 60%, while its uninterruptible power supply products operate at 97.4% efficiency when converting electricity.
The demand for data centers and AI will be very strong in the coming years, "Wierod said. I have no doubt about it