Research Briefing | Oct 9, 2024

Asia Pacific: Exports are Riding the AI Frenzy

Asia has been at the forefront of the recent global AI frenzy. That partly reflects the region’s importance in global semiconductor supply chains. Global companies specialising in different stages of production can be found across Asia.

What you will learn:

  • The boom in artificial intelligence (AI) could become the biggest factor influencing Asia exports in 2025, according to our analysis. Of global semiconductor production capacity and supplies of key materials, 75% is concentrated in Asia. More notably, for the chips under 10-nanometres that are required to execute advanced AI functions, nearly all fabrication capacity is located in Asia.
  • As the rising demand for AI is increasing in importance, we have developed a high-frequency Asia chip export index (CEI). The index aggregates monthly integrated circuits exports data in both value and volume terms for key Asian economies: Taiwan, South Korea, mainland China, Japan, and Singapore, all of which are at the front end of the AI supply chain.
  • On a three-month moving average basis, our Asia CEI grew 17.8% y/y in value terms in August, accelerating for a third consecutive month. However, the volume index appears to have retreated to single-digit growth.
  • The discrepancy between the two, which usually leads a cyclical slowdown by six to nine months, could be a prelude to moderating annual growth in Asia exports in the coming quarters, especially after the impact of a higher base kicks in.
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