Chip foundries better insulated in an AI slowdown than Asia-Pacific tech peers, S&P says
As market fears mount over waning Big Tech spending and calls to slow down frontier artificial intelligence development, Asia-Pacific semiconductor foundries are better positioned to withstand a potential downturn in AI investment than other tech hardware firms in the region, according to S&P Global Ratings. In a report published on Thursday, the rating agency said it had stress tested four key…
S&P Global Ratings has found that Asia-Pacific semiconductor foundries are better positioned to navigate an AI slowdown compared to other tech hardware firms in the region. The rating agency analyzed four key sectors – foundries, memory manufacturers, cooling component suppliers, and original design manufacturers – under two scenarios: a drop in capital expenditure from major hyperscalers and bottlenecks that could delay AI projects.
Contract chipmakers, such as TSMC, were deemed the most resilient in both scenarios. Taiwan Semiconductor Manufacturing Company (TSMC) was highlighted as particularly well-insulated due to its dominant lead in advanced manufacturing. While memory chipmakers like Samsung and SK Hynix could face more pronounced earnings declines if investment in AI peaked early, the report noted that S&P maintained its base-case forecast of strong demand for the AI value chain over the next two years.
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