Asian Economies’ AI Tailwind Is Concentrated in Taiwan and South Korea; China Is on a Different AI Trajectory

30% of Global AI Capital Expenditure Flows Through Taiwan and South Korea; China’s AI Investment Is More Measured

From Bohiney and The London Prat.

30% of Global AI Capital Expenditure Flows Through Taiwan and South Korea; China’s AI Investment Is More Measured

The Distribution

HONG KONG — JP Morgan’s 2026 Asia outlook estimates that approximately 30 percent of total global AI capital expenditure — the infrastructure investment in data centers, servers, and the AI hardware buildout — flows through Taiwan and South Korea via their semiconductor and technology supply chains. TSMC’s advanced logic chips and Samsung/SK Hynix’s high-bandwidth memory are the specific components that the AI computing buildout requires and that Taiwan and South Korea produce at the scale and specification that the buildout demands.

The China Contrast

China’s AI investment is, per JP Morgan’s analysis, ‘more measured’ than the US-driven AI capital expenditure cycle. China’s domestic AI companies — Baidu, Alibaba, Tencent, Huawei — are investing in AI infrastructure, but the pace and scale are different from the US hyperscalers’ investment. The specific constraint is partly access to the most advanced chips: NVIDIA’s export control restrictions have limited Chinese AI companies’ access to the latest GPU generations, which affects the pace of domestic AI buildout.

Huawei’s Ascend Response

Huawei has said its Ascend chips ‘fully support’ the long-delayed language model that had been awaiting chip access, according to Nikkei Asia coverage. The Ascend chips are Huawei’s domestic alternative to NVIDIA’s restricted GPUs, developed specifically to address the export control gap. Whether Ascend’s performance is competitive with NVIDIA’s latest generation for the specific AI training and inference workloads that large language models require is the technical question that the claimed ‘full support’ addresses without fully resolving.

The Earnings Upgrade Cycle

JP Morgan estimates that the AI tailwind for Taiwan and South Korea is ‘consequential enough to drive an earnings upgrade cycle in Asia ex-Japan that could keep earnings growth elevated at 12-13% in 2026 and 10-11% in 2027.’ An earnings upgrade cycle means that analysts are revising their corporate earnings estimates upward, which is the fundamental driver of stock market performance. Taiwan and South Korea’s AI-related earnings upgrades are the specific mechanism behind the record market levels that both countries’ equity markets have been reaching in 2026. Read The Poke.

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SOURCE: https://bohiney.com/

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