# AI Supply Chain Shifts Reshape APAC Markets

**Podcast:** Bloomberg Daybreak: Asia Edition
**Published:** 2026-02-13

## Transcript

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Welcome to the Daybreak Asia Podcast.
I'm Doug Chrisner.
In the APAC region, markets seem to be struggling a bit today after some weakness in U.S.
equities.
There's been a fair amount of stress over how artificial intelligence will disrupt various businesses.
Software companies, as we know, have been punished.
Add to that list publishers and financial services firms, even commercial real estate.
Now today we had logistics companies sinking on concern over how AI could disintermediate trucking brokers.
That said, there still remains a little bit of bullishness in Asia as it relates to the region's tech hardware suppliers.
Obviously, that is a very much tied to the story on artificial intelligence.
For a bit more, let's bring in Bloomberg's Winnie Sue.
She is a member of the team covering Asian equities, and when he joins from our studios in Hong Kong.
Yeah, exactly.
You know, because we were just looking at how the U.S.
has been really disrupted by this whole AI story from one sector to another.
And seems like a lot of fight going on within the market trying to find out who the bigger biggest losers are.
But in Asia, it's actually the opposite.
Many investors are saying that, you know, the struggles in the downstream that we're seeing right now in the U.S.
is actually good news for the upstream exposure that we have in Asia, especially for the likes of South Korea and also Taiwan.
So when you look at the week's performance, yes, a bit of weakness today, but actually, while the U.S.
is pretty much flat or actually uh down a little bit, in Asia, we have record high every single session throughout the past four sessions.
So that speaks a lot to kind of just where we are positioned for Asia.
And speaking of some of the factors, one, you mentioned how we are positioned upstream.
We have a lot of AI exposed names, uh especially uh the memory ones, right?
Um, with Samsung and S.K.
Heinrich.
We've also got TSMC, which also came out with pretty strong sales number for January a few days ago.
And on top of that, when you look at some of the uh sectors that really struggle in the US, for example, you were talking about uh software and also real estate and insurers even.
Interestingly, for example, in Japan, you're seeing these old school um real estate companies, they're just not as um uh they haven't adopted as much AI in their systems just yet.
And people say that it takes them way longer to be able to adopt that.
So any disruption in the AI fund actually is a blessing for them at the moment, just because they actually have been still very old-fashioned and very traditional.
So some of these factors kind of helping them as well.
You mentioned the memory makers.
I was struck today by Lenovo group saying it's expecting the crunch in the memory chip market to affect the global hardware industry for the rest of the year.
So this sounds like it's kind of a critical part of the story.
Yeah, exactly.
Right now, that memory crunch story is something that we're really chasing as we see impact felt across markets and across sectors.
Just now you mentioned um the PC sector.
Actually, very interestingly, Lenovo had their earnings out yesterday.
The results were quite good because they're seeing buyers or users rushing into the market to uh pile up their PCs ahead of this memory price hike.
And that's pretty much a front loading, but they are expecting to be further struggling with this with their gross margin when it comes to the memory price hike.
And it's not just the PCs, it's also smartphone makers and also the likes of EVs.
The other day we also heard from Xiaomi saying that they are expecting the memory price hike to also affect their margins as well.
So when it comes to the memory crunch story, we are also seeing a divergence in markets.
On one hand, you're seeing these memory chip users being hit.
And we're talking about um the global consumer electronic sectors down about 13% or so in the past few months.
But on the other hand, the memory makers are really taking off from this.
We were looking at Kioxia, for example, up, I believe a thousand percent in the past year due to this factor, and also um some of the smaller names in Taiwan, PowerChip uh macronics, you name it, up like tripling or even uh quadrupling their um share prices.
So here in the States after the bill, maybe you saw applied materials with that surprisingly upbeat sales forecast.
This seems to indicate to me that there is still healthy demand for the equipment that's needed to produce AI chips and memory semiconductors.
So this is also a story I would think that links to what we heard recently from TSMC and their plans to continue to build out capacity, right?
Yeah, exactly.
So the demand side seems to be still quite strong, especially like you mentioned, uh there's also um Jensen Huang from NVIDIA coming out and saying that this whole CapEx building is still very sustainable and actually very feasible.
Also, Mike Micron yesterday, I believe also their CFO was saying that they still expect this memory crunch to continue.
And hence you're seeing all these uh CapEx spending to continue to pour into AI.
Although, you know, the question is how much of an economic benefit is gonna come out from this, but at least so far for Asia, because we make so many of these um equipments that's necessary for the CapEx spending and for the AI build out.
So far, we're still kind of that beneficiary of these big spendings.
Before I let you go, I want to talk about the lunar new year holiday, which I know begins next week.
China will be closed for the entire week.
I think Hong Kong has a few days of holiday.
Give me your sense, Winnie, of what we are likely to see in terms of spending from consumers.
Well, so far, there seems to be some optimism when it comes to the holiday, just because lunar year is such a big one in Ch both mainland China and for Hong Kong.
So definitely some expectation for spending to pick up, and that's why you're seeing that rotation from tech into consumers ahead of lunar new year, uh, with the likes of you know retail and uh restaurants, airlines all picking up.
So that definitely is the highlight of the year when it comes to consumer spending.
But when you look at the the broader picture, overall the weep demand still remains quite weak.
We saw that from uh this week's CPI numbers as well, actually believe uh 0.2% versus an estimate of 0.4% increase.
So that goes to show how uh while this holiday might show quite a pickup overall, the demand is still weak.
But when you talk about lunar near, another thing that I want uh to kind of bring into attention is this red packet war that's going on among these Chinese internet companies.
So the likes of Tencent Um Biden's, they are uh really trying to give out these coupons and subsidies to their users to ask them to use their AI apps.
So basically, they want to secure more customers for uh these AI apps that goes really across a range of services, including uh food delivery, ticket buying, or even if you just ask a question on their AI bot.
So you can see that these internet companies really trying to pivot and to invest further in AI.
So that's also what we're gonna be watching out closely, as some expect that there might be a deep seek uh next uh model coming out for during the Chinese New Year.
Thank you so much.
Can I say happy new year?
Yes, happy new year.
Happy New Year.
Winnie Su, a member of the team covering Asian equities, joining from Hong Kong here on the Daybreak Asia Podcast.
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Welcome back to the Daybreak Asia Podcast.
I'm Doug Krisner.
The US and Taiwan have finalized a trade agreement.
It will reduce tariffs on goods from Taiwan.
It will also boost access for American goods in Taiwan's market.
This will include liquefied natural gas and crude oil.
Here is Bloomberg's Laura Davison in Hong Kong.
This uh deal has a lot of details when it comes to uh the purchasing of energy goods or or agricultural products, but there aren't a lot of specifics here about the chip uh pledges that uh were uh discussed uh last month when this a deal was initially announced.
Those aren't uh really enumerated here um in the in the paper that was signed today.
This is uh, you know, suggests that there could be a risk and that the understanding of two sides, uh both the Taiwanese government and the US government aren't exactly on the same page here.
And we've seen uh President Donald Trump get particularly perturbed when some of these things uh you know aren't moving uh to un to his understanding, even if that isn't necessarily the the broader global understanding of how these deals work.
We saw just a couple weeks ago with the South Korea uh trade deal that was was cut uh you know not too long ago that Trump felt like the that the implementation of the investments weren't coming quick enough, and he he uh uh threatened to increase tariffs on South Korea.
We also saw um also this week uh with uh the US MCA, the North American trade trade pact, that Trump actually cut himself in his first term.
Now that there's a deadline for renegotiation, he says he might want to pull out of those pact altogether.
So there's risks both in the short term and in the long term that these death that these deals may not be durable.
That was Bloomberg's Laura Davidson.
As I mentioned a moment ago, Asian equities are struggling a bit after weakness in U.S.
equities, given some fears about more AI disruption.
And that's where we begin our conversation with Julia Wong.
Julia is North Asia CIO at Nomura International Wealth Management.
And she spoke with Bloomberg TV host Sherry On and Avril Hong.
So we did see US markets really hard hit overnight.
Maybe a semblance of calm is returning now.
What do you make of this and the extent in which this could inform the moves for Asia at a time where we have been seeing the correlation between Asia and US stock markets, perhaps uh a bit different from what it used to be.
Yeah, sure.
Good morning.
Thanks for having me.
Uh so yeah, of course, I think just picking up on the AI.
We definitely think that, you know, look, um, you know, this is there is uh um a contradiction uh, you know, when it comes to what investors are worried about when it comes to AI.
Uh on the one hand, there's a fear that AI is not monetizing quite quickly enough.
On the other hand, there is massive evidence that investors are worried about sectors that are disrupted too quickly for comfort.
So those two things can't both be true at the same time.
So I think that just goes to show that there is a lot of sense that we're in uncharted territory when it comes to how this technology will develop.
And investors are, you know, to borrow one of your phrase earlier, uh, there should shoot first and ask questions later.
Um that I think means a lot of volatility probably is still on the way for us.
Uh it also means that for longer-term investors, it's time to really go to the fundamentals of companies because a lot of opportunities could actually start to emerge uh when the market sell off in a panic like this.
So when it comes to Asia, I think that you know, Asia actually does not really necessarily share the same type of issue that maybe you know US investors when it comes to AI are fearing at the moment.
Valuation is not too high.
Indices are not overly concentrated broadly for Asia.
There's a lot of other sectors to play for.
Um, and you know, it's the spending is not excessive.
In fact, I think spending could probably still ramp up in the coming years.
So I think that, and we're also in a different part of the supply chain when it comes to AI, not so exposed to sectors that are sitting on, to some extent, very high profit margin post-COVID.
So I do think that you know AI is in a much different Asia is a much more different place when it comes to uh when it comes to some of these fears in AI, and actually from that angle could be an even better diversification play for investors who want to invest in this long-term thing.
Perhaps also the fears about disruption are different because the concerns that are plaguing some of these tech companies are different.
The likes of Mbaido Alibaba, for example, in Chinese tech, not necessarily cannibalization being a problem there, but the fact that monetization is still an issue.
Could that be a risk?
Well, I think that you know China is to some degree of you know at earlier, at the earlier stage when it comes to the AI capex ramp up because they have constraints, right?
So they have constraints on chips, they have constraints on talent.
So I think their pace of development uh is slower.
That also means that the ramp up is still way ahead of us.
We have, I think, a couple of years where AI ramp up will steadily increase for the big tech companies in China.
And they're so laser focused on monetization, you're right.
They can't afford to really throw money at the problem.
They have to really make sure every step on the way is generating an ROE for investors.
That's actually a good thing.
It means that it's a steady long-term play on AI.
And also I think when it comes to China Tech, don't forget that the opportunity for China Tech is really in the automation, industrial robotic space.
It's whole industry, whole economy approach, rather than just focus on end consumers or you know advertising.
So I think that it's a much broader, maybe slower moving path because the whole manufacturing sector has to move with it.
But I think that it has the possibility of creating more longer lasting lift for productivity.
So I think that you know, at the moment, these companies are maybe selling off, you know, getting encompassed this broad fear about AI, but really their business model are quite different.
They're much more early stage.
The earnings hasn't really started to show up, these AI benefits.
So we think that actually for long-term investors, these companies are pretty interesting.
How exactly are you positioning then for these Chinese tech names at a time where we are seeing sort of bifurcation between the US and China in terms of AI models as well, right?
Today we're hearing about how uh OpenAI is accusing deep sea of distilling some of these US models.
Yeah, so I think um, you know, it's the way we approach them is that we look at what the market are worried about.
The market is worried about some of the near-term headwind when it comes to um the spillover from a very slow economic recovery, maybe some political policy changes, they're worried about geopolitics chips.
They're also worried about this spillover from AI, all of from the US trade.
So all of these are negative headwinds for China tech in the short term.
And that's why the index has been pretty badly since the beginning of the year.
It's really like some of the other peers in Asia.
But I think that the longer term, median to longer term fundamentals are actually pretty good.
Um the index have the these companies have sold off to even more attractive values.
Uh as long as you think that AI is the longer-term growth trajectory, we think that there's no question that China has to go all in on AI.
And there's no question that these companies sit at the critical point uh between this technology and the end users, be it businesses or consumers, they control the distribution channel.
All of the large language model value creation eventually will have to accrue to these platform companies.
It's a competition landscape is entirely different from the US.
So we think they stand to benefit significantly from AI, and that's yet to come.
Julia, we've alluded slightly to the geopolitical risks around tech.
And we of course continue to watch the latest headlines around trade, whether it's President Trump threatening all of these tariffs on the likes of South Korea, Canada, Europe.
Right now we're hearing that when it comes to conversations with Japan, the chief trade negotiator, Akazawa speaking in Washington about this $550 billion fund that of course they have committed into the US.
They're talking about those first projects.
Uh, the conversation with uh the Commerce Secretary Lutnik uh stood at more than 80 minutes or so.
How big are these geopolitical concerns for the private ministers uh sweeping election victory, the yen seems at a time when we have seen an incredible rally in the Japanese stock market given uh the improvements over governance and so forth?
I think the Japan fundamental case has gotten way stronger since the election because political stability was one big issue for overseas investors the last 12 months, and that just got solved.
So Takaichi Prime Minister has a mandate for growth, and that's very clear from her election victory.
So we think she will go for growth.
She will go for growth, and she has many tools to manage all the other spillovers or risks the market were worried about, be it FX or JGB yield.
You know, when you have a political stability, when you have a strong leadership, you can manage these risks because now you have credibility from the election.
So we think she has a clear mandate now to go for fiscal policy, to go for industrialization, to go for some of the things that really want to spend on to increase Japan's productivity growth for the future.
So she can go for that.
And we don't think that necessarily trade risk per se is so much of a problem, but I do think that the currency volatility always plays into the Japan market.
Uh and the dollar yen has decoupled somewhat from Nikkei last set last few uh last few days.
So that's something we're watching.
Maybe it's a short-term risk to markets.
Julia, I suppose Japan isn't the only country that is going pro growth and spurring things along with some fiscal policy.
What is the risk of spurring inflation?
And do we have to this year perhaps reassess our assumptions of rate cuts?
I think that's a very good question.
To some degree, it's already started to happen, right?
Because you see the RBA has hiked rate.
You see that the uh the US is clearly at the tail end of its easing cycle.
Uh that's the consensus.
Um more economies are central bankers are saying they're now in a comfortable place.
They don't have to do anything, they can just watch.
So clearly, I think that that's already come into play.
And that's because the reaction the policy reaction function is different for different central banks.
Uh, some of them are just look watching for inflation.
So they are more hawkish, right?
Like the RBA, like you know, maybe the RNZ as well, RB and Z as well.
Some of them are have a mandate for the labor market.
In the case of the US, uh job growth is, you know, if after revision is close to zero the last couple of uh last couple of quarters, which means that it's an expansion without job growth.
And if you're the Fed and your mandate is inflation and job growth, job growth has downside risk, and something you have to watch and take into consideration.
So I don't think it necessarily means that rates are going to go higher across the board.
I think divergence is the way we would play it.
Uh, and that means that you know, for economies where um you know they are economies uh where cyclical factors are good diversification play because of the rate policy rates are being hiked.
Actually, that means that you know FX and rate divergence versus the US.
That was Julia Wong, North Asia CIO at Nomura International Wealth Management.
Speaking with Bloomberg TV hosts Sherry On and Avril Hong, bringing you that conversation right here on the Daybreak Asia podcast.
Thanks for listening to today's episode of the Bloomberg Daybreak Asia Edition Podcast.
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