Key insights
- Nvidia's expansion into 'physical AI' is boosting its Asian supply chain, with partners like LG, Nanya, and Chinese auto tech firms seeing share gains. This is driven by massive capex from US hyperscalers like Amazon and Microsoft. Increased demand benefits memory specialists like Samsung and SK Hynix. This trend suggests continued strength in tech-heavy North Asian markets and positive implications for Nvidia's growth trajectory, indirectly influencing US equity markets.
Investing.com -- Nvidia Corp.’s strategic expansion into "physical AI" is driving a significant rally among its Asian partners as the region becomes increasingly integral to the chip giant’s production ecosystem, according to a report from Bloomberg.
Asian suppliers now account for approximately 90% of Nvidia’s production costs, a sharp increase from roughly 65% just last year.
The shift highlights a move beyond pure semiconductors into robotics, autonomous systems, and AI-enabled manufacturing, a transition CEO Jensen Huang has characterized as the next major wave of artificial intelligence.
The market’s reaction to the tech firm’s expansion has been swift, with several regional players seeing double-digit gains following news of collaboration.
LG Electronics Inc. shares surged as much as 15% on reports of integrating home robots with Nvidia’s platform, while Taiwan’s Nanya Technology Corp. climbed 10% on partnership news.
In China, Huizhou Desay SV Automotive Co. and Pateo Connect Technology Shanghai Corp. also saw shares soar after unveiling intelligent driving solutions and collaborations with the U.S. chip designer.
The momentum is supported by massive capital expenditure from U.S. "hyperscalers," with Amazon, Microsoft, and Alphabet committing nearly $200 billion each to AI spending this year.
Bloomberg data indicates that Nvidia accounts for nearly half of Microsoft’s capex and a quarter of Amazon’s, creating a massive trickle-down effect for manufacturers like Hon Hai and memory specialists like SK Hynix.
Analysts suggest that the broadening demand allows more hardware suppliers to enter the ecosystem, likely leading tech-heavy North Asian markets to continue their outperformance.
Surging demand is already manifesting in the financial results of these partners. Samsung’s semiconductor division recently reported a 48-fold jump in profit, while SK Hynix saw its quarterly earnings increase fivefold.
As the AI buildout evolves from digital generation to real-world deployment, Asia’s established infrastructure in advanced hardware and robotics provides a structurally important advantage for implementing the physical AI wave.