Exports have accelerated across small open Asian economies – Asia ex China, India, and Indonesia – in the electronics supply chains. Taiwan clocked an impressive 70% YoY export growth in January while the rest registered double-digit growth rates.
Strong export performance has driven up trade surpluses in Korea, Singapore, and Taiwan due to high domestic value-added. Countries that rely more on import content to produce these electronics goods like Malaysia, Thailand and Vietnam have not seen a real improvement in their trade balance.
The AI capex boom is behind the acceleration
Much of the export acceleration has been driven by the AI capex boom in the US. The increase in import demand for chips and other electronic goods has been unprecedented. Taiwan’s exports to the US grew at an explosive annual rate of 151% in January, while exports from Malaysia and Thailand rose by 50 to 60% last December.
Taiwan and Singapore main beneficiaries of this trend
Business cycles in small open Asian economies are generally driven by their export performance. The rise of Taiwan’s export volume in 2025 has been remarkable and it has translated directly to a significant net export contribution to GDP growth. In Q4 2025, Taiwan grew 12.7% YoY, the highest rate since 1990. Its annual growth rate of 8.7% for the whole year was mainly based on chip exports as domestic demand was weak. Singapore’s rising electronics exports have also contributed significantly to its GDP growth which accelerated to 6.9% in Q4 2025, double the 10-year average rate.
Chip shortages have driven up Korea’s export value
The story is somewhat different for Korea. The world is currently experiencing a shortage of memory chips, a key component of AI data centres. The increase in demand is not only a US phenomenon as Korean exports to China and ASEAN also rose. Korea’s Samsung and SK Hynix are major players in this space and have benefited from higher memory chip prices. Export volumes will likely not increase much until these companies finish their ongoing expansion of manufacturing facilities in two years. Supply constraints have translated into limited real GDP growth impact for Korea.
Malaysia’s growth driven by capex investment
GDP growth in Malaysia and Thailand also picked up to 6.4% and 2.5% in Q4 2025. While the export value of both countries has increased significantly, their trade balances have been flat – Malaysia – or have slightly deteriorated – Thailand. Malaysia has been specialising in chips packaging, requiring imported chips and components. High import content is in line with little improvement in current trade balances. It has recently received a significant number of foreign investment projects to expand advanced packaging and chip manufacturing capabilities. Many data centres are also being built close to Singapore. These investment projects have made a significant contribution to Malaysia’s growth in 2025.
Surge in investment is driving Thailand’s growth
Thailand’s story is similar to Malaysia. Stronger domestic demand supported the Thai economy in Q4 2025. Budget capex disbursement has risen and the improvement in private investment is in line with the recent surge in foreign direct investment. As with Malaysia, a significant part of such FDI lies in setting up AI data centres.
Resilient exports and investment to support growth in Asia
Announced capex figures by American hyperscalers as well as Asian manufacturers and AI data centre investors so far suggest that this trend will continue throughout 2026. Growth forecasts for 2026 have been revised up for most countries. Manufacturing PMIs and the new orders components are in expansionary territory for the whole region, suggesting near-term momentum. Exports are expected to remain resilient while AI related investment should increasingly contribute to growth.
By Mali Chivakul, emerging markets economist at J. Safra Sarasin Sustainable Asset Management
