Asia’s AI boom could turn from hero to zero overnight

TOKYO — When America’s AI bubble bursts, it will be a bad day for Nvidia and Intel. In Seoul, Taipei and Tokyo, it will be a national crisis.

AI has become, almost overnight, what China once was for Asia: the growth engine everyone depends on. Investors from South Korea to Taiwan to Japan should spend less time asking how high Nvidia can climb and more time asking what happens if and when Silicon Valley’s spending binge slows or even crashes.

Monday’s news that Anthropic is going public sharpens the question. The IPO could be the largest in history, raising up to US$100 billion. To justify it, Anthropic CEO Dario Amodei must convince investors that growth can stay near 1,300% a year, with net revenue retention around 900% and implied gross margins of 85%.

The bears point to Anthropic’s $80 billion in half-year net losses. Even if demand holds, the capex boom assumes vast, steady revenue for years to come.

The 94-page SEC filing is full of tripwires. It warns that AI poses “catastrophic or existential risks to humanity.” It also flags a heavy dependence on Taiwan Semiconductor Manufacturing Co., or TSMC, whose reliability is never certain given Beijing’s plans for Taiwan and investor doubts about Washington’s commitment under President Donald Trump.

And the threat of natural disasters to Taiwan’s power grid. “Any restrictions or delays on the supply of advanced chips out of Taiwan or TSMC,” Anthropic wrote, “would adversely affect our business, financial condition and results of operations.”

Denny Fish of Janus Henderson called the IPO “a generational moment,” but added that “the devil comes down to the details, and we still don’t have all the details yet.”

It could be bigger than that, as Anthropic appears to be “coming for finance,” said analyst Jame DiBiasio, author of the J.DB Report newsletter.

“This is not simply a technology supplier offering banks a more intelligent chatbot,” he said. “Anthropic is moving into the applications through which financial professionals work, while supplying the infrastructure on which competing applications depend.”

On AI, signals from Seoul are mixed. Last week, data-center firm Elice fell 32% in its Kosdaq debut, the exchange’s biggest IPO this year. Yet chip maker SK Hynix reported quarterly profit up sevenfold to $63 billion and plans to return about $45 billion to shareholders, which is lifting the Kospi. The index is up nearly 42% this year.

That momentum helps bury the week’s other headline: Goldman Sachs cut its 12-month Kospi target by 25% over AI-investment worries and valuation volatility. The index’s forward P/E has dropped to roughly four, the lowest since 2006. Goldman said the market is “pricing an overly negative fundamental outlook” and still sees “attractive risk-reward.”

No major economy has remade itself around AI as fast as South Korea. For President Lee Jae Myung, it has paid off. He pledged before taking office in June 2025 to push the Kospi above 5,000, about double its level then, by fixing corporate governance and ending the “Korea discount.” Thanks to AI, the index got there without any significant legislation or reform.

The export boom followed. Chips now make up 41% of Korean exports, which rose 83.5% year-on-year in September. In the first 20 days of October, semiconductor exports jumped 263% and computer exports 435%. Even under Trump’s tariffs, chip shipments to the US rose 154% in October, and shipments to China rose 155%.

Those are 1970s “Asian tiger” growth rates, not the numbers of the world’s 12th-largest economy and an OECD member. And they look unsustainable. If Microsoft, Amazon, Meta and Alphabet decide next year that they need fewer chips, servers and data centers, the shock would travel at rapid speed from California boardrooms to Korean factories, the stock market and the Bank of Korea.

Taiwan, too. AI-driven double-digit growth is eclipsing the hollowing out of manufacturing sectors like machinery, basic metals, textiles and chemicals. The economy grew a blistering 12.92% year-on-year in the second quarter, following 15.43% in the January-March period.

These are Taiwan’s fastest growth rates since the 1980s. In September, Taiwan’s exports posted their second monthly record in a row, jumping 60.9% from a year earlier. It marked the 35th straight month of year-on-year gains.

Even with US tariffs and trade curbs, Taiwan’s exports to the US surged 106.2% in September year-on-year to $27.46 billion, while exports to China jumped ‌30.2%. These, too, are Asian tiger-level increases.

Taiwan markets also arguably face the biggest concentration risk anywhere. TSMC directly drives as much as 15% of Taiwan’s roughly $1 trillion in annual GDP. Indirectly, though, roughly 1,600 domestic suppliers rely on TSMC, many of them large enough to affect unemployment trends if things went awry.

At the same time, TSMC also makes up at least 42% of the Taiwan Stock Exchange Weighted Index. Any bad news from TSMC could quickly reverse the index’s 61%-plus rally this year.

TSMC is also something of a global indicator, sitting at the center of global AI infrastructure spending and whether hyperscalers increase or cut capex budgets. All this means global markets pay very close attention to granular data both from TSMC and Taiwan more broadly. Any zigs or zags by hyperscalers would affect foundries, chip packaging operations, equipment suppliers, industrial real estate trends and demand for banking credit.

Though Taiwan is technologically indispensable, Korea’s risks are more systemic. The International Monetary Fund sees the same risk. Krishna Srinivasan, its Asia-Pacific director, said Korea has benefited more than almost any other country from AI hardware demand.

His colleague Sonali Jain-Chandra warns that this also means growing exposure to the investment cycle. “A sharp reversal in AI investment,” she said, “could lead to shrinking exports, reduced investment and declining government revenue, while also tightening financial conditions,” all amplified by falling AI-related asset prices.

Six months into his term, Bank of Korea Governor Shin Hyun-song said the country sits “at the intersection” of the AI investment boom and the war in the Middle East. For growth, the two forces pull in opposite directions, and to date AI is winning. For inflation, they push the same way: up.

The numbers are striking. South Korea’s gross national income rose 13.2% year-on-year in the first quarter, nearly 3.5 times GDP growth of 3.8%. Unlike past export booms, which followed falling import prices, this one is happening despite surging export prices.

But the gains are not widely shared. Thanks to AI, they flow mainly to high-income and high-asset households through wages and stock prices, deepening an inequality already driven by punishing real-estate costs.

That makes it harder to turn tech profits into broad consumption. Record earnings at Samsung and SK Hynix are not reaching non-chip industries or the small and mid-sized firms that employ most Koreans. Hanyang University’s Kim Gwang-suk notes that outside chips, most export categories have weakened markedly.

BOK researchers have warned of a “semiconductor version of Dutch disease,” in which one booming industry stifles the rest.

AI is also bolstering South Korea’s dominant family-run conglomerates. Since the 1997 crisis, governments have promised to rein them in, with tough antitrust action meant to level the field, lift productivity, empower women and encourage young entrepreneurs.

Much of the AI energy now flows through those same conglomerates, setting back those reform efforts. The BOK fears a tech version of the “resource curse,” in which a small circle of officials and executives makes the decisions and keeps the spoils.

President Lee knows inequality is a risk. His answer is a roughly $1 trillion investment in Gwangju, 300 kilometers from Seoul, to spread the boom across a nation of 51 million. It could be a viable model, but it won’t move at AI speed.

BOK chief Shin’s predecessor, Rhee Chang-yong, called the chip surge “genuine luck” and Korea’s greatest vulnerability, warning that a reversal could resemble the dot-com collapse of 2000.

Laura Alfaro, chief economist at the Inter-American Development Bank, said Korea shouldn’t try to restrain the boom: “I wouldn’t kill the goose that lays the golden egg.”

She favors a national stabilization fund to cushion households from sudden downturns and capital-flow swings. “Right now, the game is AI, and Korea is growing faster than other countries. It happened because for many years you have built the production and infrastructure.”

Korea is not alone. Moody’s Analytics economist Stefan Angrick said Asia-Pacific economies are “running at two different speeds.” AI is boosting exports and production, while higher inflation and tighter policy drag on growth.

Semiconductor demand lifts shipments across Taiwan, Korea, Japan, China and parts of Southeast Asia, from Malaysia to Thailand, but “strong exports mask trouble at home.” Evercore ISI analyst Amit Daryanani calls it “what an AI supercycle looks like.”

Thailand shows how far the AI trade has reshaped markets. The Stock Exchange of Thailand is up around 25% this year, led by outsized rallies in Delta Electronics, Hana Microelectronics and KCE Electronics, local firms that export various parts, pieces and gear for data centers. An AI reckoning in the US would hit Bangkok’s bourse hard.

For now, “there are some warning signals, but we would say that they are not grave yet,” said Runchana Pongsaparn, lead economist at the Asean+3 Macroeconomic Research Office (AMRO).

Yet in a report earlier this month, AMRO warned that Southeast Asia, China, Japan and Korea are “particularly exposed” because of their central role in global supply chains and their growing integration into AI-related financial markets. A disorderly correction could spread through trade, capital flows and financing costs.

The region accounts for two-thirds of global AI-related trade. AMRO estimates that a demand slowdown could cut 2027 growth by as much as 1.5 percentage points, currently forecast at 4.1%.

That makes it the biggest global risk factor, perhaps even bigger than a prolonged disruption in the Strait of Hormuz as the Iran war drags on. As such, AI could go from hero to zero in no time in Asia.

Follow William Pesek on X at @WilliamPesek