JP Morgan headquarters in Canary Wharf financial district on August 15, 2023 in London, United Kingdom.

Mike Kemp | In photos | Getty Images

SINGAPORE – Asia-Pacific’s technology sector is growing on the back of a semiconductor boom, even as other industries struggle amid global macro uncertainty, according to investment bank JPMorgan.

“Technology is recovering, which is why Asia performed relatively well in the second half of last year. The Chinese industry is benefiting, North Asia is clearly benefiting more from this,” Bruce Kassman, chief economist at JPMorgan, said at a media briefing on Tuesday.

The technology sector, which thrived during the Covid-19 pandemic as companies accelerated their digitization efforts, suffered a slowdown in 2022 and 2023 as high inflation and interest rates dampened consumer spending, hit product demand and led to to cuts.

Global technology spending weakened in 2023 as layoffs rose, Deloitte said in technology industry outlook report 2024.

“However, there are now glimmers of hope that a tech comeback may be imminent: economists have cut their recession risk estimates and analysts are optimistic that the tech sector could return to modest growth in 2024,” Deloitte said.

The recovery in technology is significant as other industries are still struggling. “While we have seen a recovery in technology, we are not seeing a broader-based recovery in non-technology sectors,” Ong Sin Beng, head of EM Asia economic research at JPMorgan, said on Tuesday.

The AI ​​boom continues to boost chip makers and drive technological growth.

US chip design company Nvidia posted a 265% jump in revenue in the fourth quarter, thanks to surging demand for its graphics processors. thousands of which are used to launch and train OpenAI’s ChatGPT.

But the recovery has not been uniform across the tech sector, JPMorgan said, pointing to the semiconductor industry as a bright spot amid the AI ​​boom.

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

of Taiwan TSMC is the primary chipmaker under contract for Nvidia and has benefited from Nvidia’s performance and potential.

South Korean DRAM chipmakers such as Samsung Electronics and SK Hynix have also benefited from the AI ​​boom, as large language models such as ChatGPT require high-performance memory chips to generate human responses.

“Our equity analysts who monitor the sector remain quite positive simply because it is built on broader digitization, data centers, AI, etc.,” Ong said.

He also said Singapore is “definitely seeing that increase” from the semiconductor boom. The country produces 20% of the world’s chip equipmentaccording to data shared at the Semiconductor Industry Association of Singapore Semiconductor Business Connect 2022.

Last month, Singapore’s Deputy Prime Minister Lawrence Wong said in his budget speech that the country would invest more than S$1 billion ($743 million) over the next five years to further boost the country’s AI capabilities.

As part of the investment, Singapore will work to ensure it can provide access to the advanced chips “that are so important to the development and deployment of AI,” Wong said.