Asian technology companies are increasingly forging partnerships with Nvidia, the leading artificial intelligence (AI) chipmaker, driving sharp stock gains for firms reported to be joining its supply chain or collaborating in physical AI, including South Korea's LG Electronics.
According to Bloomberg on Tuesday, Asian suppliers now account for an estimated 90% of Nvidia's production costs, up sharply from around 65% a year ago. Bloomberg said the jump reflects Nvidia's rapidly growing reliance on Asian firms with competitive strengths in manufacturing, assembly and key components as demand for its products surges.
"It is inevitable that global tech companies like Nvidia will expand their reliance on Asian supply chains," said Vey-Sern Ling, managing director at Swiss asset manager Union Bancaire Privée (UBP). "Physical AI will create additional demand on top of existing AI chip demand."
Nvidia has strengthened ties with chipmakers such as SK hynix (000660.KS) and Samsung Electronics (005930.KS) in recent years, broadening its Asian partner base. The recent shift, Bloomberg noted, is that cooperation is moving beyond semiconductors into physical AI areas such as robotics and autonomous driving.
LG Electronics (066570.KS) drew significant market attention after reports that it is in talks to link its home robots with Nvidia's platform. Its shares jumped as much as 15% intraday on the news. "It is true that we have been in contact with Nvidia," an LG Electronics official said. "We are reviewing strategic cooperation in the physical AI field, including the robotics ecosystem."
Taiwan's Nanya Technology also saw its shares rise sharply on speculation of a partnership with Nvidia, while China's Huizhou Desay extended a rally after unveiling a solution jointly developed with Nvidia.
"As demand expands and diversifies, more technology companies are gaining opportunities to join the supply chain," said Marvin Chen, a strategist at Bloomberg Intelligence. "As long as AI investment continues to expand, the North Asia-focused technology market is likely to deliver relatively strong performance."
Rajeev De Mello, portfolio manager at GAMA Asset Management, said, "Asia has accumulated technological capabilities and supply chains across hardware, including semiconductors, components and servers, so it is benefiting from the expansion of AI demand."
