For years, the artificial intelligence (AI) investment story has been largely synonymous with the US. Silicon Valley designed the models, American technology giants funded the infrastructure and a small cohort of mega-cap stocks captured most of the investor enthusiasm. But focusing solely on the most visible beneficiaries misses an important development: the economic impact of AI is increasingly migrating across the Pacific.

Recent trade data illustrates the shift. Per the chart below, export growth for South Korea (+71%), Taiwan (+40%), Malaysia (+41%) and Thailand (+22%) has surged in the first half of 2026. Technology goods have been central to this strength. The four countries occupy different positions within the supply chain, but the common thread is clear. AI-related demand is translating into tangible gains in Asian manufacturing and trade.

This is clearly more than another cyclical upswing in electronics. The AI investment cycle is broadening far beyond demand for leading-edge processors. More sophisticated models require greater memory capacity, advanced packaging, networking equipment and reliable electricity. As discussed in our most recent Ask Forstrong, this brings a much wider collection of Asian businesses into the fold, including component suppliers, industrial manufacturers, power equipment producers and grid infrastructure specialists. 

Taiwan remains indispensable to advanced semiconductor production, while South Korea dominates the global memory market. Further down the supply chain, Malaysia and Thailand are benefiting from expanding testing, assembly and component manufacturing. Data centre investment is also accelerating across Southeast Asia, where lower costs and improving infrastructure are improving project economics.

China presents a separate, but equally important, dimension. US export restrictions were intended to constrain its access to cutting-edge technology. Instead, they have intensified the push toward domestic self-sufficiency. China’s recent growth has been propelled by high-tech manufacturing and exports, even as household consumption remains soft. The rapid ascent of domestic chipmakers suggests the global AI ecosystem may ultimately become more competitive and less US-centric than many investors anticipated.

Risks should not be overlooked. Semiconductor demand has always been cyclical, and aggressive capacity expansion can quickly transform shortages into gluts, particularly as hyperscaler capex faces heightened scrutiny. Meanwhile, trade restrictions, geopolitical tensions and an overreliance on a small number of companies like TSMC and ASML remain persistent sources of uncertainty. The tug-of-war between structural growth and cyclical dynamics will only intensify.

Still, the macroeconomic evidence is becoming difficult to ignore. AI is not merely boosting the earnings of a handful of American companies. It is strengthening exports, attracting foreign investment and accelerating infrastructure spending across Asia. In a world where economic momentum remains uneven, proximity to the technology supply chain is becoming an increasingly important dividing line between countries.

Investors may have spent the opening phase of the AI boom focused on who designs the smartest models. The next phase could be shaped by who supplies the memory, equipment, electricity and physical capacity required to run them.

We remain invested with a view of continuing resilient global growth, despite a challenging geopolitical environment and renewed inflationary pressure. However, downside risks are elevated, as higher interest rates impact consumers and businesses, while global central banks are forced to adjust monetary policy settings. We have increased cash and equivalents exposure this quarter.

Recent labour market trends point to a firming US economy, while rising headline inflation appears to be broadening out to “core” price inputs. While incoming Fed Chair Kevin Warsh has a hawkish reputation, he will face considerable political pressure to steer the Federal Open Market Committee away from aggressive interest rate hikes. We have initiated short-term TIPS exposure to hedge against inflation risk this quarter.

European equity earnings should remain well-supported by a nascent growth recovery across the continent. However, the energy price spike and a hawkish-leaning European Central Bank present near-term risks to the economic momentum. We have trimmed our exposure to European equities this quarter.

Chinese internet equities have come under pressure as investors have become increasingly focused on the monetization challenges facing the Chinese “hyperscaler” technology platforms and the sustainability of their artificial intelligence investment spending. Meanwhile, demand for Taiwan’s world-leading semiconductor exports should continue to thrive with global data centre investment accelerating and persistent supply constraints for leading-edge chips. We have liquidated our exposure to Chinese internet equities and initiated exposure to Taiwanese equities in balanced and growth-oriented strategies this quarter.

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