The artificial intelligence (AI) investment cycle remains the key positive driver of Asia-Pacific growth in 2027, BMI Country Risk and Industry Research said on last Thursday.
Continued commitments by major technology firms to invest in AI infrastructure suggest that the current upcycle will remain stronger and more durable than previously expected, supporting demand for semiconductors, servers and related electronics across the region’s technology supply chain, the research house said in a note.
Taiwan, China; South Korea; and Singapore remain the clearest beneficiaries. Taiwan and South Korea continue to draw support from strong semiconductor demand, while Singapore benefits through advanced electronics manufacturing, exports and trade-related services, according to BMI.
The impact goes beyond the semiconductor supply chain. In China, the AI investment cycle comes at an opportune time as continued supply-side expansion and subdued household consumption increase reliance on external demand to absorb output.
Stronger AI-related spending is supporting demand for a broad range of electronics and manufactured exports while reinforcing efforts to upgrade industrial capacity.
Malaysia is attracting further investment into data centers and related infrastructure, while in Hong Kong, China, stronger technology-related trade flows and financing activity should support trade-related and financial services.
“The benefits also extend indirectly to Japan. While Japanese firms are less directly exposed to AI infrastructure spending, stronger growth in key trading partners such as China; South Korea and Taiwan, China should support exports,” said BMI.
These are among the economies for which BMI has made limited changes to our 2027 growth forecasts (see table below) despite emerging headwinds from higher energy prices and tighter financial conditions.
Key risks, however, included a slowdown in hyperscaler investment could weaken semiconductor demand and technology exports; escalating trade or technology restrictions could disrupt regional supply chains; AI-driven growth may remain concentrated in a narrow set of sectors, limiting broader spillovers to the wider economy.
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