(Feb 24): Citrini Research’s vision of a dystopian future shaped by artificial intelligence is reinforcing bets that Asia will emerge as a winner of the AI disruption, thanks to its wealth of companies like chipmakers, in contrast to the turmoil hitting parts of the US market.
The heavy concentration of advanced chip manufacturers, semiconductor foundries and assemblers, alongside freshly listed AI-related stocks in China, has increasingly lured investors to Asia. Alap Shah, chief investment officer at Lotus Technology Management and co-author of the report by Citrini — a little-known firm founded by James van Geelen — said in a Bloomberg TV interview that semiconductors, data centres and foundation labs are key beneficiaries of the AI trade.
The MSCI Asia Pacific Information Technology Index, as well as the chip-heavy benchmarks in Korea and Taiwan, gained more than 1.5% to record highs. That compares with a global slump in software stocks after the Citrini report sparked a fresh bout of the AI “scare trade", the latest in a series of industries hit by sudden sell-offs. The tech-led rally has helped the MSCI Asia Pacific Index to its strongest ever start to a year relative to the S&P 500 Index.
“Clearly semiconductors are huge winners,” Shah said. “Things that are upstream to semiconductors are huge winners — so everything required to construct a data centre."
According to Shah, the windfall gains from AI “will accrue in two places. They’ll accrue in the AI complex — so the material stocks, semiconductor stocks and foundation lab company stocks and some tech stocks.” Taiwan Semiconductor Manufacturing Co, Samsung Electronics Co and SK Hynix offer major chip plays while China’s MiniMax Group Inc and Knowledge Atlas Technology JSC Ltd, which have more than doubled this month, represent rare pure-play AI lab exposures. Japan also plays a vital role across the equipment value chain.
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“The top stocks in Asia like TSMC, Samsung and SK Hynix are all direct beneficiaries of ever-increasing AI spending,” said Vey-Sern Ling, managing director at Union Bancaire Privee in Singapore. “The AI scare trade really started with software and most of the notable software companies in the world are listed in the US.”
Ling added that other major constituents of the MSCI Asia Pacific Index, including banks, materials and industrial firms, are less exposed to AI disruption.
Reflecting that divergence, the weekly correlation between the MSCI Asia Pacific IT Index and the Nasdaq 100 has slid to 0.45, the weakest since October 2017, according to Bloomberg-compiled data.
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The dominance of chipmakers in local benchmarks further amplifies the trend. TSMC commands a 45% weighting in Taiwan’s Taiex index, roughly triple its level a decade ago. In South Korea, Samsung Electronics and SK Hynix together account for nearly 40% of the Kospi, the world’s best-performing gauge this year.
“The decoupling has already begun,” said Christopher Forbes, the head of Asia at CMC Markets in Singapore. “With Asian earnings growth projected at 13–14% through 2027, any re-coupling call that ignores index composition is fighting the wrong war.”
The unease around software has been fuelled by rapid advances in generative AI tools such as Anthropic PBC’s Claude, which have intensified debate over how quickly traditional software business models could be eroded. Black Swan writer Nassim Taleb also warned that parts of the sector may face severe stress, including potential bankruptcies.
The shift highlights investors’ rotation away from AI pioneers burdened by heavy spending and toward hardware producers with stronger pricing power, many of them in Asia. Surging memory-chip prices have buoyed companies such as Samsung while TSMC’s role as the world’s leading contract chipmaker has underpinned Taiwanese equities.
To be sure, more traditional technology names, like major service providers in India, have also been on the losing side. A gauge including Tata Consultancy Services Ltd and Infosys Ltd has dropped more than 20% since the Anthropic release.
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Still, investors say Asian stocks overall have a good case for extending their outperformance, supported by their distinct positioning in the AI ecosystem, cheaper valuations and stronger earnings growth. South Korea on Monday reported that semiconductor exports climbed 134% in February so far from a year ago, helping the central bank predict “significantly higher” growth this year compared to last.
“Asian stocks are likely to be more resilient as long as the AI capex theme remains in place,” said Chetan Seth, an Asia-Pacific equity strategist at Nomura Holdings. “After all, Asia serves as the manufacturing epicentre for the critical hardware infrastructure needed for AI investments, with key Asian equity markets — particularly Korea and Taiwan — heavily weighted towards companies that stand to benefit from these trends.”
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