Asia is central to the global build-out of AI server infrastructure, given its manufacturing strengths and supply chain integration, according to a report from Eastspring Investments, the asset management business of Prudential.
The main drivers for AI server demand, according the the report, is the rising AI adoption across industries like healthcare, retail, finance, and automotive. Hyperscalers are also continuing to invest in AI to maintain market position and grow.
Further, governments are also incresingly investing in AI research and development, supporting ongoing infrastructure needs, as well as increasing inference workloads, which require persistent processing and data center expansion.
Asia’s deep manufacturing capabilities and integrated supply chains are also enabling rapid scaling, with its ability to supply critical components, its deep manufacturing and assembly capabilities, and integrated supply chains that enable rapid scaling as AI demand accelerates.
The ecosystem is highly interconnected, with Taiwan leading manufacturing and advanced packaging, South Korea dominating memory, Japan providing critical materials and equipment, Southeast Asia supporting assembly and deployment, and China contributing components and manufacturing scale, said the report.
Morei mportantly, this ecosystem has been built over decades, creating scale, expertise and supplier networks that are
difficult to replicate.
While US leads in chip design and software, and Europe retains strengths in equipment and materials, Asia dominates foundry, memory, packaging, and system integration. Other regions may benefit from growing data centre investment but remain less developed in semiconductor and AI server supply chains. As a result, Asia remains central to the global AI infrastructure build out, the report said.
For investors, the challenge is identifying where pricing power exists. Selectivity matters as not every company exposed to AI servers will benefit equally. Some companies may capture volume growth, but margins may remain under pressure. By contrast, areas such as memory, advanced foundry and packaging, interconnects, power and cooling could enjoy stronger pricing power if bottlenecks persist.