The hunt is on for companies that could benefit from the tailwinds of an unprecedented wave of stock offerings in the United States (US), and investors are increasingly honing in on the Asian supply chain.
Their thesis is that the billions of dollars that SpaceX, Anthropic PBC and OpenAI are set to raise will kick off a fresh round of technology spending — with a good chunk of that finding its way to the makers of server parts, specialised materials, cooling components and power equipment. For stock markets in Asia, that could be the catalyst for the next leg of a historic rally.
Hardware firms in the region are already among the biggest winners of the data-center buildout, which has propelled chipmakers Taiwan Semiconductor Manufacturing Co., Samsung Electronics Co. and SK Hynix Inc. into the trillion-dollar club. But after their breakneck gains, some investors have become uneasy about those lofty valuations and are now betting that the next phase will create a new class of champions.
“AI IPOs could further fuel the capex boom at a time when Asian chip stocks look stretched,” said Ken Wong, an Asian equity portfolio specialist at Eastspring Investments Hong Kong Ltd. “We’re currently underweighting semiconductors in our Asia technology strategy and focusing more on the electronic component makers.”
“The flow-through to Asia is prominently visible” in the latest chipmaker earnings reports, she said. “As the AI rally matures, the broadening beyond pure-play names is underway.”
Some of the region’s hottest stock trades have been makers of electronic components used in servers as well as providers of materials and techniques used in making semiconductors. South Korea’s Samsung Electro-Mechanics and Japan’s Ibiden are among the top performers on MSCI’s broadest Asia equity index this year. Among more far-flung plays, IG’s Yip highlights Japanese toilet maker Toto, which supplies ceramic materials for chipmaking equipment.
Asian chipmakers have reported windfall profits on AI, on strong pricing power as the new source of demand creates dramatic semiconductor shortages. Supply crunches are now starting to appear further down the supply chain, and the trend may deepen with the continued inflow of capex funding.
Greater investor awareness of new bottlenecks has combined with technical factors to drive broadening of the AI trade beyond the biggest chipmakers. Given concentration risks and limits on how much funds can invest in single stocks, money managers are looking at where earnings are only beginning to reflect the scale of AI infrastructure spending.
