28 July 2026
The AI trade can unwind as fast as it was put on. Asia’s tech suppliers and their shareholders should consider their financing options while equity valuations trade well above historical norms.
On June 22, South Korea’s Kospi fell almost 10% in a single session and memory-chip leader SK Hynix shed more than 12%, as a tech sell-off that began on Wall Street rippled through the markets that had ridden the AI wave the hardest.[1]
Days earlier the index had eclipsed 9,000 and Japan's Nikkei had pushed above 72,000, both records.[2] The speed of the reversal demonstrated that market performance so concentrated in the AI trade could unravel fast.
The episode wasn’t a one-off: US semiconductor stocks, in particular, were quick to follow suit. A week of profit-taking swept the sector, with Intel down more than 20% over a week.[3] Analysts pointed to a familiar list of worries: dot-com-era valuations, enterprise price-cutting, disappointing revenue estimates and hyperscalers reselling excess capacity.
Southeast Asian businesses have been a major beneficiary of the AI ecosystem build-out. In May, Singapore’s non-oil exports rose 38.4% year-on-year, driven by a 94.8% jump in electronics — integrated circuits up 80.9%, disk media up 227.8%, PCs up 140.9% — that was almost entirely driven by demand for AI-related infrastructure, with shipments concentrated to Taiwan, South Korea, and the US.[4]
But longer-term prospects for revenue growth are unclear. OpenAI, the industry's bellwether for AI, posted a net loss of $38.5 billion for 2025 and a disappointing operating margin for the first quarter.[5] On the buyer side, Publicis Sapient’s 2026 Global Enterprise AI Report found that while 73% of enterprises now use AI regularly, only 10% say it’s core to how their business operates.[6] Adoption has been slowest in Europe and Asia, offering little protection if hardware demand slows in the US.[7],[8]
Firms that have geared up — amassing inventory and capacity against forecast orders — risk being left holding physical stock that may lose value quickly if the build-out stalls.
Company directors and long-term stockholders could consider exploring the variety of funding opportunities available to them while the window holds. Equity financing is one way to monetize recent gains and secure funding in case current cash buffers fall short.
How the dot com boom compares
The parallels to 2000 are uncanny. Back then, Cisco, the maker of essential networking equipment, became the most valuable company in the world with a market capitalization of more than $500 billion – only for its shares to fall dramatically over the following two years.[9]
Some consumer websites at the center of market euphoria failed just as fast as they had risen, listing but shutting down shortly after.[10],[11] But the deeper damage was in stranded network infrastructure that had been built for demand that took a decade to arrive.[12]
This time, monetization has arrived early, rather than after the crash. OpenAI and Anthropic are already generating billions in annualized revenue and pursuing IPOs, unlike the pre-revenue dot-com startups of 2000.
In that sense, the AI build-out looks less like 1999 and more like the 2010s cloud-computing cycle, when digitalization and smartphone platforms turned data-center spending into a durable, cash-generating business.
Today’s equivalent build-out depends on infrastructure being built increasingly by Asian suppliers — and a shift now underway in the chip market illustrates how exposed they are.
General-purpose processors dominate 60% of AI inference workloads, and many companies are betting that AI inference and agentic workloads will restore the central processing unit (CPU) to the center of compute. Intel CEO Lip-Bu Tan argues that AI is pushing the total addressable chip market toward $1 trillion.[13],[14]
CPUs are a mature, commoditized technology that far more companies know how to build than cutting-edge graphics processing units (GPUs). If predictions of a resurgence in the importance of CPUs are accurate, they would point toward intensifying competition and thinner margins rather than the supernormal profits currently enjoyed by their customers.
Most companies in Asia’s technology manufacturing ecosystem sit on both sides of this widening split in the chip market – supplying the advanced logic and high-bandwidth memory that keep GPU margins elevated, while also serving the CPU and general-purpose chip market. They are counting on exponential demand growth over the next few quarters and are stocking up accordingly.
Singapore, Taiwanese, Japanese and Korean component makers, foundries, assemblers and chip makers are therefore increasingly exposed to the volatility of the capex cycle, and earnings expectations, of large US technology firms. It is remarkably similar to the position in which telecom fiber companies, which were suppliers to companies like Cisco, found themselves in twenty-five years ago.[15]
Equity financing, which does not carry a repayment schedule tied to a particular quarter’s shipment numbers, can let a supplier convert today’s elevated valuation into growth capital.
For directors weighing how to fund their cash-heavy expansion plans in the coming quarters – while also wary of the need to retain cash buffers – the case for equity-linked financing is growing stronger by the day. And it is most relevant while the window — and the valuations — are still favorable.
[1] https://www.cnbc.com/2026/06/22/stock-market-today-live-updates.html
[2] https://asia.nikkei.com/business/markets/nikkei-closes-above-70-000-and-kospi-eclipses-9-000-for-first-time
[3] https://finance.yahoo.com/markets/stocks/articles/intel-stock-crashed-21-week-142500586.html
[4] https://www.straitstimes.com/business/economy/singapore-upgrades-2026-key-exports-growth-forecast-on-strong-ai-related-electronics-demand
[5] https://www.wheresyoured.at/exclusive-openai-financials/
[6] https://www.publicissapient.com/company/news/ai-adoption-enterprise-readiness-report-2026
[7] https://www.brookings.edu/articles/why-is-the-u-s-outpacing-european-countries-in-ai-adoption/
[8] https://restofworld.org/charts/2026/RBCGL-average-ai-adoption-rate-across-regions
[9] https://www.hardingloevner.com/insights/nvidia-and-the-cautionary-tale-of-cisco-systems/
[10] https://www.telegraph.co.uk/technology/2020/03/10/five-dotcom-bubble-failures-five-survived-crash/
[11] https://www.theguardian.com/technology/2001/feb/28/shopping.newmedia
[12] https://www.thebubblebubble.com/telecom-bubble/
[13] https://asia.nikkei.com/business/technology/tech-asia/why-cpus-are-now-at-the-center-of-the-ai-race
[14] https://www.theregister.com/security/2026/04/24/intel-expects-ai-inference-to-drive-demand-for-its-cpus/5227642
[15] https://www.forbes.com/sites/danrunkevicius/2025/03/24/is-the-ai-boom-headed-for-its-dark-fiber-moment/
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