JPMorgan states Asia’s tech sector is a brilliant area amidst international unpredictability

AI drives broad gains in chips

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JP Morgan head office at Canary Wharf monetary district on 15 th August 2023 in London, United Kingdom.

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SINGAPORE– Asia-Pacific’s tech sector has actually been growing on the back of the semiconductor boom even as other markets battle amidst international macro unpredictability, according to financial investment bank JPMorgan

“Tech has been recovering, that’s why Asia has done reasonably well in the second half of last year. China industry benefited, North Asia obviously benefited more from it,” Bruce Kasman, primary financial expert at JPMorgan stated in a media rundown on Tuesday.

The tech sector, which flourished throughout the Covid-19 pandemic as business accelerated their digitalization efforts, went through a downturn in 2022 and 2023 as high inflation and rates of interest softened customer costs, struck item need and caused layoffs.

Global tech costs deteriorated in 2023 while layoffs increased, stated Deloitte in a report on tech market’s 2024 outlook.

“But there are now glimmers of hope that a tech comeback may be imminent: Economists have lowered their assessments of recession risk, and analysts are optimistic that the tech sector could return to modest growth in 2024,” Deloitte stated.

The healing in tech is substantial as other markets are still having a hard time. “Even though we have seen recovery in tech, we are not seeing a broader based recovery in the non-tech sectors,” stated Ong Sin Beng, head of EM Asia economics research study at JPMorgan, on Tuesday.

The expert system boom continues to increase chipmakers and is driving tech development.

U.S. chip style company Nvidia saw a 265% dive in fourth-quarter income, thanks to increasing need for its graphics processing systems, countless which are utilized to run and train OpenAI’s ChatGPT.

But the healing is not consistent throughout the tech sector, JPMorgan stated, singling out the semiconductor market as the intense area amidst the AI boom.

“It is primarily in the semiconductor, dynamic random access memory sector. So we are seeing, for example, Korean production doing quite well. Taiwan is because of the logic chips we are seeing that do relatively well. So those are the two key beneficiaries in North Asia,” Ong stated.

Taiwan’s TSMC is the main agreement chip maker for Nvidia and has actually taken advantage of Nvidia’s efficiency and capacity.

South Korean DRAM chip makers such as Samsung Electronics and SK Hynix have actually likewise taken advantage of the AI boom as big language designs like ChatGPT need high-performance memory chips to create human-like actions.

“Our equity analysts who oversee the sector remain quite positive simply because it’s built out of broader digitization, data centers, AI, etc,” Ong stated.

He likewise stated Singapore was “certainly seeing that lift” from the semiconductor boom. The nation produces 20% of international chip devices, according to information shared at the Singapore Semiconductor Industry Association Semiconductor Business Connect 2022.

Last month, Singapore’s deputy prime minister, Lawrence Wong, stated in his Budget speech that the nation will invest more than 1 billion Singapore dollars ($743 million) over the next 5 years to additional increase the nation’s AI abilities.

As part of the financial investment, Singapore will work to guarantee it can protect access to the sophisticated chips “that are so crucial to AI development and deployment,” Wong stated.