Amidst the Middle East war, the "most logical" investment theme emerges! Fund managers bet on Asian semiconductor stocks, outperforming 96% of their peers.

Recently, chip stocks closely related to AI training/inference computational infrastructure, as well as a broader global category of chip stocks including high-performance storage, logic, analog, and MCU, plunged amid a new round of geopolitical conflicts in the Middle East. A top fund manager focusing on emerging market stocks stated that chip stocks, especially in the Asian region, are the best market tool for hedging against geopolitical war risks. The manager of an emerging market stock fund that outperformed its peers by 96% in the past year stated that Asian chip stocks focusing on high-performance and cutting-edge process chips related to artificial intelligence provide the best hedge against the prospect of prolonged Iran war. According to the core viewpoint of the fund manager Jan de Bruijn in a recent interview, the Robeco Emerging Stars Equities stock fund will allocate over 40% of its assets to chip giants in the Korean and Taiwanese markets. The 40% risk exposure is mainly focused on storage chips and advanced process chip themes, reflecting the main investment strategy of the top fund manager: chip giants closely related to artificial intelligence will maintain strong pricing power and fundamental expansion potential even in economic downturns or intense fluctuations in the global financial market. Jan de Bruijn stated in the interview, "Artificial intelligence will definitely not disappear suddenly even if the global economy enters a recession. Taiwan holds up to 80% market share in the logic chip manufacturing sub-market, and even higher in some cases. Korean chip manufacturing giants also have around 80% to 90% near monopoly share in the high-bandwidth memory (HBM) market. So obviously, they are able to pass on significant unexpected high costs." As shown in the chart above, Asian chip manufacturing giants' stock prices have significantly outperformed Asian markets and even global stock markets this year. Omdia's latest research shows that by 2026, global semiconductor industry revenue is expected to increase by over 30%, surpassing the historical milestone of $1 trillion for the first time, betting that this strong growth is mainly driven by data center storage chips, AI GPU/AI ASIC, and data center server CPU demand driven by the continuous explosive expansion of AI training/inference computational power. Citrini Research recently published the "2028 AI Doomsday Prediction" - a comprehensive vision of a dystopian AI future shaped by artificial intelligence. The institution predicts that by 2028, despite the global productivity of AI soaring beyond expectations, a "global economic epidemic" caused by the complete disruption of white-collar employment will lead to panic in global financial markets. However, both the author of this dystopian report and fund manager Jan de Bruijn, who outperformed 96% of his peers, are extremely bullish on Asian chip giants including TSMC, Samsung, and SK Hynix. This "AI Prosperity Crisis Memo from the Future" appears to strengthen a market bet: with Asia having core chip manufacturers like TSMC and major AI infrastructure manufacturing companies like Hon Hai, SK Hynix, and Samsung, the Asian AI computing infrastructure chain will become the biggest winner in the "AI disrupts everything" trend; in contrast, the US technology sector with a high exposure to software and light assets is facing turmoil. Amidst the background of geopolitical conflicts in the Middle East, top emerging market stock funds are betting on Asian chip stocks. According to the latest statistics compiled by institutions, the total assets under management of the Robeco Emerging Stars Equities stock fund at the end of February were approximately $4.6 billion, with a one-year investment return of 45%, outperforming most of its peers. The fund's strategy includes proxy trading, buying stocks of holding companies that trade at a large discount relative to their underlying assets, sometimes up to 60%. This allows them to obtain exposure to their preferred investment themes at relatively attractive valuations. Therefore, the fund mostly holds shares of holding companies like SK Square Co. instead of directly holding SK Hynix or Naspers Ltd.(Naspers' subsidiary Prosus has long been the largest shareholder of Tencent), rather than directly holding Tencent. He stated in the interview, "Sometimes, you may find that a holding company holds a majority stake in a company, and when you add up the valuation models, you realize that you are investing in that stock to a large extent at a valuation discount. We believe that this discount will narrow over time." The stock fund is overweight in the Latin American market, maintains a selective exposure in Asia, and has a low exposure in the Middle East region. de Bruijn said, "I believe that our current allocation is quite reasonable given what is currently happening, especially in terms of the risk exposure of Asian chip stocks." "As long as the theme of massive AI capital expenditure (i.e. AI CAPEX) logic continues to exist in the market, Asian chip stocks may have greater resilience," said Chetan Seth, Asia-Pacific stock strategist at Nomura Holdings. "After all, Asia is the manufacturing center of critical AI hardware infrastructure needed for massive investments in AI data centers, and Asian stock markets - especially Korea and Taiwan, are highly skewed towards those hardware manufacturing companies that will greatly benefit from these growth trends." As the model scales, inference chains, and multimodal/agent AI workloads drive exponential expansion of computational resource consumption, the capital expenditure mainstay of tech giants increasingly focuses on AI computing infrastructure concentrated in the face of a surge in AI training/inference demand, global investors continue to anchor the "AI bull market narrative" surrounding the new product iterations of NVIDIA, Google TPU clusters, and AMD, as one of the most certain optimistic investment narratives in the global stock market. However, with recent "AI panic trading" and "AI disrupts everything" outbreaks in US software stocks, global capital is increasingly shifting towards SaaS software stocks with low exposure/weight in risk of light asset software companies in the Asian stock market, particularly flooding into Asian chip stocks and AI data center chains. Geopolitical wars will undoubtedly disturb market sentiment, but the AI arms race will continue to flourish, making Asian chip giants more like "core assets in volatility," enjoying not only profit growth but also oligopoly premiums, scarce capacity premiums, and upward valuation centers in tumultuous markets. As the core viewpoint of fund manager Jan de Bruijn, within the global stock market, "Asian chip super giants" positioned at the core of AI computing supply constraints, with near-monopoly market shares and absolute pricing power, are one of the strongest and most sustainable strategic lines, only these chip giants can produce indispensable key components in AI training and inference infrastructure. Citrini's AI doomsday concerns mainly target the vulnerability of business models (seats, subscription renewals, process intermediaries) in the AI agent/AI intelligent body era - these giants are highly concentrated in the US; but regardless of the turmoil in the software sector, as long as the world continues to "frantically acquire AI computing infrastructure, massively build AI data centers, train/infer/fine-tune large AI models", upstream semiconductor, storage, servers/chip foundry, 2.5D CoWoS/3D/3.5D advanced packaging testing, servers/power supply/cooling, and AI data center chains are easier to be seen as "more deterministic AI cash flow channels." Therefore, until the logic mainline of "AI capital expenditure - hardware manufacturing and supply - scarcity pricing of computing power" is refuted, Asian chip stocks and AI computing industry leaders are more likely to run stronger structural alpha. Overall, the outlook for Asian chip giants is bright even as concerns about AI disruption continue to spread globally, setting them up as the core beneficiaries in the "AI disrupts everything" trend.