In what ways could the sustained rally in Asian equity markets, driven by US AI spending optimism, reshape regional capital allocation and technology‑sector competitive balance over the next five years?
The sustained rally in Asian equity markets, propelled by US AI spending optimism, is catalyzing a structural transformation of regional capital allocation and technology-sector competitive dynamics that will fundamentally reshape Asia's position in the global technology value chain over the next five years. This analysis examines the multidimensional mechanisms through which this transformation is occurring across capital flows, competitive positioning, infrastructure development, and institutional investment patterns.
Asian semiconductor manufacturers are deploying unprecedented capital to capture the AI infrastructure buildout, with approximately 75% of US hyperscaler AI capital expenditure—roughly $450 billion of a projected $600-700 billion total—flowing toward AI-specific hardware, much of which is manufactured in AsiaBig Tech's $650-700 Billion AI Infrastructure Push Reshapes Cash ...mlq .
Taiwan Semiconductor Manufacturing Company (TSMC) has committed to capital expenditure of $52-56 billion for 2026 alone, following $40.9 billion in 2025, with management indicating that the next three years will require "significantly higher" investment than the $101 billion deployed over 2023-2025TSMC Has No Choice But To Trust The Sunny AI Forecasts Of Its Customersnextplatform +1. TSMC projects AI revenue to grow at a mid-to-high-50% compound annual growth rate through 2029Artificial Intelligence (AI) Could Deliver Another Decade of Growth. This Stock Is a Prime Candidate to Be a Winner. | The Motley Foolfool . The company is expanding advanced manufacturing to Japan, with plans to mass-produce 3-nanometer chips at its Kumamoto facilities, representing total investment of approximately $17 billionTSMC Upgrades Japan Plans To 3nm Chips In $17B Expansion, CC Wei Briefed Sanae Takaichi (UPDATED) - Apple (NASDAQ:AAPL), NVIDIA (NASDAQ:NVDA) - Benzingabenzinga .
Samsung Electronics has announced cumulative logic chip investments of KRW 171 trillion ($118 billion) through 2030, up from an earlier KRW 133 trillion commitment, while adding a new chip production line at its Pyeongtaek facility as part of the Samsung Group's 450 trillion won ($310.79 billion) domestic investment over five yearsSamsung Electronics to Boost Investment in Logic Chip Businesses to KRW 171 Trillion by 2030 | Samsung Semiconductor Globalsamsung +1.
SK Hynix is establishing a Silicon Valley-based AI investment company with at least $10 billion in committed capital, while constructing a $3.87 billion advanced chip-packaging facility in Indiana and deploying nearly $13 billion for advanced packaging investments in South Korea SK Hynix plans $10 billion AI investment arm in US - KED Globalkedglobal . The company projects the global HBM market will grow at a 33% compound annual rate from 2025 to 2030SK Hynix Bets $13 Billion To Lock In AI Memory Dominancebenzinga .
A persistent valuation gap between Asian and US technology equities is facilitating sustained capital reallocation. The MSCI Asia Pacific Information Technology Index trades at a forward price-to-earnings multiple of 16.3 times, compared with approximately 25 times for both the Nasdaq 100 Index and the Philadelphia Stock Exchange Semiconductor IndexGlobal AI race shows Asia leading as stocks start 2026 with bang | The Straits Timesstraitstimes +1. This differential persists despite the Asian gauge outperforming the Nasdaq by 33 percentage points since end-2024Asian Tech Stocks Surge in 2026 Amid AI Demand and Valuation Appgurufocus .
Goldman Sachs strategists have adopted a bullish stance on Asian tech stocks driven by surging AI demand and reasonable valuations, while Citi highlights the core role of Asian tech firms in the semiconductor supply chain and their earnings potentialAsian Tech Stocks Surge in 2026 Amid AI Demand and Valuation Appgurufocus . South Korea's Kospi Index has more than doubled since the start of 2025, though valuations remain barely keeping pace with profit forecasts according to investors at Jupiter Fund Management and Matthews AsiaA $1.7 Trillion Stock Rally Fails to Wipe Out 'Korea Discount' - Bloomberg.combloomberg .
Asia Pacific sovereign investors have shifted from cautious observation to optimistic conviction regarding AI, expanding exposure to cloud infrastructure, data centers, and semiconductors while integrating AI tools across investment and operational processesAPAC sovereign investors move from caution to commitment on AI | Deloitte Globaldeloitte .
South Korea's National Pension Service (NPS) is positioned as a likely major financial investor in the government's proposed National Growth Fund valued at KRW 100 trillion ($72 billion), which will absorb losses before private investment to encourage deployment into advanced industries including AI and semiconductorsSouth Korea's AI & Innovation Investment - Citicitigroup . The Lee administration's 2026 budget expands R&D spending 19% year-over-year and industry spending 15% year-over-year to support AI initiativesSouth Korea's AI & Innovation Investment - Citicitigroup .
Korea Investment Corporation (KIC) is investing in AI and technology companies in public markets while exploring opportunities throughout the AI value chain, including data centers, energy infrastructure, core technologies, and applicationsAPAC sovereign investors move from caution to commitment on AI | Deloitte Globaldeloitte . Japan's Government Pension Investment Fund (GPIF) is exploring AI applications in investment manager selection through strategic relationshipsAPAC sovereign investors move from caution to commitment on AI | Deloitte Globaldeloitte .
Southeast Asian sovereign wealth funds are taking a disciplined approach to valuation, favoring infrastructure-linked investments over speculative bets. Notable transactions include Future Fund (Australia) acquiring additional stakes in CDC Data Centers, and Southeast Asian SWFs participating in the Equinix xScale joint venture and Vantage Data Centers investmentsAPAC sovereign investors move from caution to commitment on AI | Deloitte Globaldeloitte .
Southeast Asia's data center market attracted $10.23 billion in investments in 2023, with projections reaching $17.73 billion by 2029 at a 9.59% CAGRData Centers in Southeast Asia: Expansion and Opportunities Amid Rising AI Adoption - ARC Grouparc-group . The Asia Pacific data center construction market was valued at $26.25 billion in 2024 and is projected to reach $52.72 billion by 2030 at a 12.32% CAGRAPAC Data Center Construction Market Report 2025-2030 | Edge Data Centers and AI-Ready Facilities Emerging as Key APAC Market Trendsglobenewswire .
Malaysia's Johor corridor exemplifies the infrastructure acceleration, with over 40 data center projects worth approximately $40 billion approved by mid-2025APAC sovereign investors move from caution to commitment on AI | Deloitte Globaldeloitte . The state now has 15 operational data centers, with another 11 under construction and 25 approved projects for combined capacity of 5.3 GWAsia's AI data center financing gets complicatedkr-asia .
Major hyperscaler commitments include:
Vietnam has secured a $1 billion data center and AI infrastructure project through a partnership between G42 (Abu Dhabi) and a consortium comprising FPT Corp. and Viet Thai Group, deploying significant cloud capacity across three data center locationsAbu Dhabi’s G42 Leads $1 Billion Data Center Project in Vietnam - Bloombergbloomberg +1.
Asia's demand for data center compute power is projected to exceed 100 GW by 2030, with AI-specific capacity estimated at 45 GWAsia faces 100GW energy surge as AI and data centres dominate power demand | Asian Business Reviewasianbusinessreview . Total annual electricity consumption across all data centers in the region is projected at 832 TWh under base-case scenarios by 2030, compared with 193 TWh in 2023—a quadrupling of consumptionAsia faces 100GW energy surge as AI and data centres dominate power demand | Asian Business Reviewasianbusinessreview .
Malaysia faces the steepest trajectory, with data center power consumption expected to increase sevenfold from 8.5 TWh in 2024 to 68 TWh in 2030, equivalent to adding Singapore's entire 2023 power consumption of 57 TWhFrom AI to emissions: Aligning ASEAN's digital growth with energy transition goals | Emberember-energy . This growth will push data center power demand to 30% of Malaysia's total national demand by 2030From AI to emissions: Aligning ASEAN's digital growth with energy transition goals | Emberember-energy .
An estimated $45-75 billion in solar and wind capacity investments will be required by 2030 to power ASEAN data centers sustainablyFrom AI to emissions: Aligning ASEAN's digital growth with energy transition goals | Emberember-energy . Power availability has become the single most binding constraint across APAC, with grid congestion, interconnection queues, and delayed transmission upgrades slowing projects even where capital and land are securedAsia-Pacific: $150B+ AI Data Center Infrastructure Enters the Industrial Phaseglobaldatacenterhub .
Japan's industry ministry is nearly quadrupling budgeted support for cutting-edge semiconductors and AI development to approximately ¥1.23 trillion ($7.9 billion) for fiscal year 2026, with overall METI budget rising 50% from the previous year to ¥3.07 trillionJapan to Quadruple Spending Support for Chips, AI in Budget - Bloombergbloomberg . The government has committed to ¥10 trillion ($65 billion) in subsidies and incentives to secure Japan's position in the semiconductor industryJapan's Technology Sector Drives AI and Semiconductor Growthbofa .
Rapidus, Japan's homegrown semiconductor venture, has received government support exceeding 920 billion yen ($6.1 billion) plus access to an additional $650 million budgeted for April 2025, with Toyota and Sony investing over 100 billion yen in the project targeting 2-nanometer production by 2027Japan's Technology Sector Drives AI and Semiconductor Growthbofa +1.
Japan is also rolling out a $550 billion investment package under a new trade agreement with the United States to boost strategic sectors tied to advanced manufacturing, employing a blended finance model with approximately 12% direct equity and the remainder as loans and government-backed guarantees Inside Japan's Bold $550 Billion Plan to Secure the Future of Semiconductors marketsandmarkets .
Micron Technology is investing 1.5 trillion yen ($9.6 billion) to build a new high-bandwidth memory plant in Hiroshima, with Japan's METI providing up to 500 billion yen for the project targeting shipments around 2028Micron to invest $9.6 billion in Japan to build AI memory chip plant, Nikkei reports | Reutersreuters .
South Korea's semiconductor manufacturers collectively hold approximately 70% of global DRAM market share and more than 70% of HBM shareKorea Semiconductor Device Market Size, Outlook, Trends Report & Growth 2031mordorintelligence . SK Hynix leads the global HBM market with 53% share in Q3 2025, followed by Samsung at 35% and Micron at 11%SK Hynix Bets $13 Billion To Lock In AI Memory Dominancebenzinga .
HBM's market share in the DRAM segment is forecast to leap from 18% in 2024 to more than 50% by 2030Semiconductors in Focus: Trends Shaping the Next Wave of Innovationetf . By 2030, Korean chipmakers are projected to drive DRAM market share to over 70% while both companies are expected to modestly grow share in NAND Flash, particularly in high-speed enterprise SSDs tailored for hyperscale AI and cloud computingProjections to 2030: How Korea’s Chipmakers Could Re-Shape the Semi World - Newsallaboutcircuits .
The Korean government's "K-Semiconductor Strategy" and "Semiconductor Powerhouse Strategy" target 10% system semiconductor market share by 2030 (up from 3% in 2022), with strengthened tax support for facility investment (15-25%) and R&D (30-50%), and plans to train 150,000 semiconductor professionals by 2030Semiconductor | InvestKOREA(ENG)investkorea .
US export controls are forcing a fundamental restructuring of China's AI chip ecosystem. Bernstein Research projects Huawei will account for approximately 50% of the Chinese AI chip market by 2026, with Nvidia's share shrinking from 39% to 8%Huawei to own 50% of Chinese AI chip market by 2026: Report - Huawei Centralhuaweicentral .
Cambricon Technologies has achieved a historic turnaround, projecting approximately 6 billion RMB in 2025 revenue with net profit exceeding 1.85 billion RMB—its first profitable year since IPO in 2020—driven by explosive growth in generative AI and large language model demand within ChinaCambricon 2025 Profit Forecast: 6 Billion Revenue ... - PulseTechpulsartech . The company plans to deliver half a million AI accelerators in 2026, including up to 300,000 units of its most advanced Siyuan 590 and 690 chipsCambricon Aims to Triple Output to Replace Nvidia in China - Bloombergbloomberg .
However, significant capability gaps persist. The best US AI chips are currently approximately five times more powerful than Huawei's best offerings, with this gap projected to widen to seventeen times by 2027China’s AI Chip Deficit: Why Huawei Can’t Catch Nvidia and U.S. Export Controls Should Remain | Council on Foreign Relationscfr . Even under aggressive production assumptions, Huawei produces only about 5% of the aggregate AI computing power of NvidiaChina’s AI Chip Deficit: Why Huawei Can’t Catch Nvidia and U.S. Export Controls Should Remain | Council on Foreign Relationscfr .
China's domestic AI semiconductor demand is expected to expand from approximately $40 billion in 2025 to approximately $100 billion in 2030, with domestic chip sales projected to grow at 74% CAGR for the next three yearsHuawei to own 50% of Chinese AI chip market by 2026: Report - Huawei Centralhuaweicentral +1.
India's AI sector is anticipated to contribute approximately $400 billion to the national economy by 2030, with data center investments exceeding $60 billion by 2024 and projections indicating this could surpass $100 billion by 2027India’s AI Infrastructure and Emerging Market Leadership: An Outlookchina-briefing .
Major investment commitments include:
Total FDI inflows crossed $80.5 billion in FY 2024-25, with technology-led services expected to remain the primary magnet for foreign capitalStrong fundamentals, big-ticket investments to propel India's FDI in 2026 - The Times of Indiaindiatimes . The government has approved INR 107.3 billion ($1.24 billion) for AI-specific data center infrastructure, marking a shift toward AI-ready facilities with liquid cooling and high-density workload supportIndia’s AI Infrastructure and Emerging Market Leadership: An Outlookchina-briefing .
India's positioning as the "anti-AI trade" relative to semiconductor-heavy Taiwan and South Korea may attract rotational capital if AI valuations in hardware-exposed markets experience correctionsIf AI Trade Cracks, Can India Markets Outperform? Expert View | S Naren | India Investment Summityoutube .
Venture capital investment in Japan surged in Q4 2025 to nearly $1.9 billion across 320 deals, propelling full-year investment to more than $5.8 billion—second only to the 2021 recordAsia: Q4'25 Venture Pulse Reportkpmg . Notable transactions included $235 million for intelligent automation firm Mujin and $135 million for foundational AI model developer Sakana AIAsia: Q4'25 Venture Pulse Reportkpmg .
In China, AI enablement attracted significant capital despite subdued overall VC activity, with the two largest Q4 2025 deals concentrated in autonomous driving: DeepBlue Auto raising $867 million and Neolix Technologies securing $600 millionAsia: Q4'25 Venture Pulse Reportkpmg . Chinese AI chip companies are racing to IPO markets, with Shanghai Biren Technology's $717 million offering and surging Hong Kong listings signaling strong demand for future national championsThe 2026 Asian Tech Bull Run: Semiconductor-Driven Growth and AI Momentumainvest +1.
India is projected to generate as much as $20 billion from IPOs in 2026, with Fractal Analytics announcing an IPO price band targeting approximately 144.5 billion rupees valuationAsia's strong equity deals pipeline to be tested by AI bubble concerns in 2026 | Reutersreuters +1.
Microsoft has committed to equipping 2.5 million people across ASEAN with AI skills by 2025, implementing initiatives in Indonesia, Malaysia, the Philippines, Thailand, and VietnamMicrosoft announces AI skilling opportunities for 2.5 million people in the ASEAN region by 2025 - Microsoft Stories Asiamicrosoft . Google.org and the ASEAN Foundation have launched the $5 million AI Ready ASEAN programme targeting 5.5 million learnersAI Ready ASEAN - ASEAN Foundationaseanfoundation .
Thailand's "AI Skills for Tourism Industry" program is skilling 100,000 young entrepreneurs across all regions, while the Philippines is equipping 1 million Department of Education learners with AI and cybersecurity skillsMicrosoft announces AI skilling opportunities for 2.5 million people in the ASEAN region by 2025 - Microsoft Stories Asiamicrosoft . The ASEAN Responsible AI Roadmap 2025-2030 establishes a comprehensive framework for regional AI governance, workforce development, and cross-border collaboration[PDF] ASEAN Responsible AI Roadmap - Final.docxasean .
The technology decoupling between the US and China is creating structural shifts in regional capital allocation. China is investing over $150 billion into semiconductor self-sufficiency through its 15th five-year plan (2026-2030), targeting 7nm and 5nm production, advanced packaging, and photonic chipsThe Silicon War: US vs China Tech Battle That Will Change Everything (2026 Analysis)youtube .
Taiwan remains the critical choke point, with TSMC manufacturing over 90% of the world's most advanced chips. US facilities won't reach full capacity until 2027-2028, maintaining Taiwan's strategic centralityThe Silicon War: US vs China Tech Battle That Will Change Everything (2026 Analysis)youtube . The emergence of two separate technology spheres—a "silicon curtain"—is forcing companies like Samsung, TSMC, and ASML to choose sides, while countries caught in between face difficult choices between American technology access and Chinese market accessThe Silicon War: US vs China Tech Battle That Will Change Everything (2026 Analysis)youtube .
US semiconductor export controls impose estimated medium-term GDP impact of up to 0.8% cumulative hit to China's GDP levels over 2024-2026, though this is notably smaller than impacts from zero-Covid policy or property sector correctionsImplications of US semiconductor export controls for Chinaoxfordeconomics .
Dimension | Current State (2025-2026) | Projected Trajectory (2030) |
|---|---|---|
| Asian Tech Valuation Premium | 35% discount to US (16.3x vs 25x P/E) | Narrowing as earnings growth (36-79%) exceeds US (28%) |
| TSMC AI Revenue CAGR | Accelerating | Mid-to-high 50% through 2029 |
| SK Hynix HBM Market Share | 53% global | Majority share maintained with HBM4/5 |
| China Domestic AI Chip Share | ~40% (Huawei) | 50%+ with domestic production exceeding demand by 2028 |
| ASEAN Data Center Investment | $10.23B (2023) | $17.73B by 2029 |
| Asia Pacific Data Center Power | 12.5 GW | 24-30 GW (40% of global total) |
| India Data Center Capacity | ~1.4 GW | ~8 GW (5x growth) |
| Japan Semiconductor Subsidies | ¥1.23T annual | ¥10T cumulative commitment |
The sustained Asian equity rally represents not merely a cyclical valuation bounce but a fundamental recapitalization of the region's technology manufacturing base. Capital allocation is shifting from consumer electronics assembly toward AI compute infrastructure—foundries, high-bandwidth memory, and power systems—while competitive balance is evolving from a supplier-designer divide toward vertical integration and regional ecosystem ownership. The transformation positions Asia not simply as a builder of US-designed AI systems but as a primary architect of global intelligence infrastructure, with material implications for geopolitical leverage, industrial policy, and long-term economic positioning.