Taiwan Semiconductor Manufacturing Co. fell 7 percent and SoftBank Group dropped 9 percent on Thursday after Beijing-based Moonshot AI released Kimi K3, an open-weight model that Fortune describes as the largest yet published and that undercuts Anthropic’s pricing by roughly two-thirds. The timing wasn’t incidental: the release landed the same day President Xi Jinping addressed the World AI Conference in Shanghai.

Moonshot concedes K3 “still trails” Anthropic’s Claude Fable 5 and OpenAI’s GPT 5.6 Sol, while claiming it “consistently” outperformed every other model tested. One independent ranking from Arena.ai placed it first, ahead of Anthropic. Priced at $15 per million output tokens against $50 for Fable 5, the model reprices the frontier without quite matching it.

The equity reaction was indiscriminate in a way that reveals the market’s priors. Chinese AI-adjacent names sold off alongside Western suppliers: Z.ai fell about 28 percent in Hong Kong, MiniMax dropped 16 percent, Alibaba slipped 4 percent, and the Nasdaq closed down roughly 1 percent, according to TechCrunch. Alibaba and Tencent are Moonshot backers. Moonshot itself raised $2 billion in May at a valuation above $20 billion.

The analytical pushback arrived quickly. Bloomberg argued the memory footprint of models like K3 still supports SK Hynix and TSMC even as compute efficiency improves. Patrick Moorhead told CNBC by email that part of the selloff reflected Washington’s ongoing debate over U.S. reliance on Chinese open-source models, not a pure fundamentals read.

This is the second DeepSeek-shaped tremor in eighteen months, and the pattern is becoming legible: a Chinese lab ships, U.S. suppliers sell off, analysts explain why the reaction was overdone, and the frontier premium quietly compresses anyway.

Sources