Key themes in technology, media and telecom in Asia Pacific

What is your view on investor sentiment in the tech sector?

Investor interest in Asia’s tech sector is strongest for companies enabling artificial intelligence, especially those making advanced chips like GPUs and AI-specific processors. Over the past couple of years, investors have been active in semiconductor and hardware tech, and since early 2025, their focus has expanded to China’s generative AI (GenAI) ecosystem.

While consumer tech companies have lagged due to earlier growth from China’s subsidies and pre-tariff buying, the iPhone supply chain stands out with stronger-than-expected demand. Industrial and automotive tech firms are stabilizing after a long period of slow sales, but investors remain cautious as the recovery is expected to be gradual.

Concerns about an “AI bubble” exist, but we don’t see excessive expansion—companies are building capacity carefully, and supply remains tight due to disciplined growth over recent years.

What are the key drivers and headwinds shaping the sector right now?

The sector’s main drivers are strong demand for AI technology and disciplined expansion by tech companies, which has led to price increases in areas like memory, storage, and semiconductor packaging.

Major US tech firms and AI labs are planning significant investments, and sovereign demand for AI is also rising. Competition in mature sectors such as China e-commerce and the push for monetization and investment in GenAI are also shaping the landscape. Semiconductor companies have been cautious with capital spending, but we expect this to accelerate in 2026, benefiting equipment suppliers globally.

On the headwind side, trade policies and US-China relations remain major uncertainties. While recent tariffs haven’t directly impacted the tech supply chain, they have made companies more cautious about investing, especially in industrial and automotive tech. Consumer demand is also mixed, adding to the sector’s challenges.

What indicators should investors watch to gauge the health and direction of the APAC tech sector?

Investors should closely watch company earnings forecasts, as ongoing upward revisions signal continued growth in the sector. AI demand and monetization are critical themes attracting attention from both investors and corporates.

Another key indicator is capital spending by major US cloud service providers, which has been surprisingly strong and is expected to grow another 30% in 2026. This continued investment supports the sector’s momentum.

Additionally, the pace at which tech companies expand their production capacity is important; so far, they’ve been prudent, which helps extend the current growth cycle.

Building new semiconductor capacity typically takes 1.5 to 2 years, so careful expansion means the sector’s uptrend could last longer. These factors together provide a clear picture of the sector’s health and future direction.