G Sachs: AI Investment Boom Spillover to Asia; Taiwan, S Korea Biggest Regional Winners

G Sachs published a research report stating that investment in AI model training and operations continues to grow rapidly. It expects capital expenditure by the five largest hyperscale cloud service providers in the US on data centers and computing power to reach USD750 billion in 2026, representing an 80% YoY increase. Globally, related investment could reach twice that scale. Of total data center capital expenditure, around 60% to 70% is allocated to AI servers, storage and networking equipment. These hardware products are almost entirely manufactured in Asia, generating significant spillover effects for multiple economies in the region.

The bank noted that the AI boom is significantly driving economic growth in Asias technology-exporting economies. Taiwan holds a dominant position in global advanced logic chip production and AI server manufacturing. Technology exports are projected to contribute 4.5 ppts to its real GDP growth in 2026. S Korea, as a major supplier of advanced memory chips, is also expected to see a 1 ppt boost to growth. Despite challenges from elevated energy prices, strong performance in technology exports is expected to offset related negative impacts and improve the current account positions of these economies.

The report also mentioned that although China has a vast electronics manufacturing base, its integration into the global AI supply chain is relatively limited due to US export controls and policies promoting AI self-sufficiency. It remains outside the leading-edge semiconductor chip supply chain, and its technology export growth driven by AI investment is relatively moderate. Nevertheless, China continues to supply a large volume of lower-end components and materials, while stepping up investment in its domestic AI ecosystem. (da/a)