Chip foundries better insulated in an AI slowdown than Asia-Pacific tech peers, S&P says
Contract chipmakers like TSMC are well protected against spending contractions by hyperscalers, based on stress tests by the ratings agency
As market fears mount over waning Big Tech spending and calls to slow down frontier artificial intelligence development, Asia-Pacific semiconductor foundries are better positioned to withstand a potential downturn in AI investment than other tech hardware firms in the region, according to S&P Global Ratings.
In a report published on Thursday, the rating agency said it had stress tested four key Asia-Pacific sectors – foundries, memory manufacturers, cooling component suppliers and original design manufacturers that assemble servers – against two downside scenarios for the AI boom.
The first possibility involved a drop in capital expenditure from major hyperscalers like Amazon and Microsoft. The second stemmed from bottlenecks that could delay AI projects, such as power grid constraints and land scarcity.