Competition from China, both at home and in other markets, is a big part of the story. But Chivakul believes that the AI boom should buy some time for these countries to upgrade their technology to stay competitive. At the same time, the geopolitical shift should be supportive of longer-term growth.

Korea, Malaysia, Singapore and Taiwan have been riding the AI wave
Chivakul emphasised that Korea, Malaysia, Singapore and Taiwan are continuing to benefit from the AI investment boom. Consensus GDP growth has been revised up as demand for chips and other related electrical and electronic products used for the data centre build-out is continuing to surge. “Export growth and trade surpluses have risen significantly across these countries while investment in new capacity has picked-up. As global investment into AI infrastructure is expected to carry on into next year, these countries should continue to ride the wave,” Chivakul said in a note.

“But for Korea, Singapore and Taiwan, the surge in the trade surplus due to strong demand for chips and other AI-related products has masked relatively weak performance of most export sectors,” Chivakul continued. Korea’s exports ex-chips and other information, communication technology (ICT) equipment have stagnated since 2023. Exports of motor vehicles, one of Korea’s key sectors, did not grow in 2024 and only rose 3 per cent in 2025. General machinery exports, another major category, fell by 12 per cent between 2023 and 2025.

“Taiwan and Singapore fare better with 9 per cent and 3 per cent growth of non-ICT and non-oil exports between the same years. In both countries, AI-related equipment dominates their exports. Malaysia is the only country among the top AI supply chain countries with robust growth in non-ICT exports,” Chivakul said.

He said that the AI boom has a slightly different impact on Malaysia and Thailand compared with Korea/Singapore/Taiwan. While exports of electronic products have surged, imports of electronic components have also increased markedly as the two countries have attracted a significant amount of investment in data centres. Malaysia’s low electricity costs, the availability of water and its proximity to Singapore makes it very competitive location for setting up data centres.

“Competition from China, both at home and in third markets is an important reason for relatively flat non-ICT exports,” Chivakul continued. The so-called China shock 2.0 is affecting both low-tech as well as high-tech manufacturers as China has caught up on the technology ladder. Korea’s imports from China (ex-fuels) have risen from about 25 per cent of total imports in 2015 to about 30 per cent today. The same figure for Taiwan is about 20 per cent today, slightly lower than the pandemic peak of 25 per cent. For ASEAN countries, China serves both as a competitor and as a reason why they have attracted more foreign direct investment for non-ICT exports. Supply chain diversification, or the so-called “China+1” strategy has supported Malaysian exports. To a certain extent, Thailand has also benefited from the trend, although the negative impact of Chinese competition is also strong.

Chivakul said the AI boom was helping these countries to buy some time for upgrading their technology and competitiveness. “The Korean government, for example, is investing heavily into AI and semiconductor research and development. Taiwan’s national development plan through 2028 focuses on AI-driven industrial upgrades and digital transformation,” he said. “While flat non-ICT exports could be alarming over the medium term, other factors should continue to support these economies even if China has started to catch with the semiconductor and other advanced technologies.”

“The ongoing geopolitical shift is one such factor. A good example is Korea’s shipbuilding industry which has been strongly impacted by Chinese competition in the 2010s,” Chivakul continued. “Even as Korea pivoted to high-value vessel segments, exports fell throughout the decade. The post-pandemic turnaround was supported by cooperation with the US. Ship exports have experienced double digit growth rates since 2024.”