By Cameron Robertson, Portfolio Manager – Platinum Asia Fund
Artificial intelligence, robotics and autonomous driving have dominated headlines for the past two years. Much of the market attention has centred on the United States and the handful of mega cap technology companies driving the AI boom. Yet some of the most interesting developments are happening elsewhere, particularly across Asia.
For decades, many investors tended to viewed Asia under the lens of manufacturing, exports and population growth. That picture has changed dramatically. Across China, Taiwan, Korea and India, companies are building technologies that are shaping the next phase of the global economy.
In many cases, these businesses are no longer simply suppliers to Western technology firms. They are becoming leaders in their own right.
One of the clearest examples is autonomous driving. A few years ago, robotaxis felt like science fiction or a Silicon Valley experiment that was always “five years away”. Today, they are operating commercially in several cities around the world.
Companies such as Pony AI, a China based autonomous driving company focused on robotaxi services, are expanding rapidly as the economics behind the technology improve. The cost of sensors and computing systems has fallen sharply in recent years, making large scale deployment increasingly realistic.
That matters because the investment case is not really about futuristic cars. It is about operating leverage. Transport businesses have historically relied on human labour as their largest expense. Remove the driver and the economics begin to change quickly.
There are still hurdles to overcome. Regulation, safety standards and infrastructure all remain important challenges. Recent incidents involving autonomous vehicles in the United States also highlight that the technology is not perfect. But progress is happening far faster than many investors expected.
Autonomous driving is only one part of the story.
Asia also sits at the centre of the semiconductor industry that underpins AI development globally. Advanced chips used in AI training, cloud computing and data centres rely heavily on Asian manufacturers. Taiwan Semiconductor Manufacturing Company TSMC has become one of the world’s most strategically important technology businesses, while Korean memory chip producer SK Hynix has benefited from surging demand tied to AI infrastructure spending.
The scale of investment flowing into AI related infrastructure is enormous. Global technology companies are spending hundreds of billions of dollars building data centres and computing capacity to support AI models and applications. That spending flows through supply chains that are deeply connected to Asia.
Beyond semiconductors, many Asian technology companies are evolving rapidly. Large digital platforms are expanding into cloud services, payments, AI tools and software development, while smaller businesses are finding opportunities in robotics, online entertainment and consumer applications powered by AI.
For investors, one of the more attractive aspects of the region is the breadth of opportunity available. Exposure is not limited to a single company or theme. Investors can access established market leaders generating significant cash flow alongside emerging businesses still in earlier growth phases.
Markets, of course, will continue to swing between optimism and scepticism. That is the nature of every major technological cycle. We have already seen periods where investors aggressively rewarded anything associated with AI, regardless of the underlying fundamentals. More recently, parts of the market have begun reassessing how quickly earnings growth will ultimately emerge.
That volatility is unlikely to disappear. But underneath the market noise, the broader direction remains clear. Demand for computing power, automation and AI enabled services continues to grow, and Asia is becoming increasingly important to that ecosystem.
For long term investors, the challenge is separating durable businesses from speculative excitement. Not every company exposed to AI will succeed. However, the structural forces driving digitisation and automation are unlikely to reverse.
Much of the next wave of technology development is already happening across Asia. For investors seeking exposure to these trends, the Platinum Asia Fund Complex ETF (ASX:PAXX) provides access to a diversified portfolio of Asian companies operating across sectors including semiconductors, digital platforms and emerging technologies.
This material has been prepared for general information purposes only and does not constitute investment advice or a recommendation. Investors should consider their objectives, financial situation and needs before making investment decisions.
