Why is Asia a beneficiary of the semiconductor chip shortage during this Covid-19 pandemic?
As the business world adapts towards increased use of technology, demand surges for a vital component called “chips”. These so-called chips function as the computational “brains” that process data and perform the duties needed to run various products such as IoTs (Internet of Things), smartphones, computers, or cars. You may ask, how is this related to the Covid-19 pandemic?
We must admit that the Covid-19 pandemic has altered our lifestyles quite dramatically. It has
- Changed where we work. Instead of the office, we now work from home
- Changed how we shop. We now increasingly shop online
- Changed where we watch movies. Digital streaming is now the way to go
Did you notice that all these activities have one thing in common? They all use technology devices such as a computer or smartphone. This shows that while the Covid-19 pandemic is troublesome, it creates tremendous opportunities for the “technology business” as demand surges. This is especially true for manufacturers of semiconductor chips that gives these devices the processing power.
Now, how does this bring “Asia” into the picture? How does Asia benefit?
Chip demand has risen to the point that we are now seeing a “chip shortage crisis” as supply cannot keep up with demand from many industries and car manufacturers, even causing some carmakers to announce they need to suspend production for a while. While this is a crisis for many companies, it’s a tremendous growth opportunity for many chip manufacturers as orders overflow. Of course, this includes the world’s largest chipmaker in Asia like Taiwan Semiconductor Manufacturing Company or better known as “TSMC”.
TSMC makes chips for the world’s leading tech companies like Apple, Qualcomm and Nvidia. It ranks number 1 in market share of chip production with a 55.6% share. The company is still exhibiting continuous growth. Furthermore, TSMC has earmarked a US$100bn budget to ramp up chip production capacity further over the next 3 years to support increased demand going forwards. This makes TSMC one of the world’s key chip manufacturer during this Covid-19 pandemic and beyond.
How can we invest in TSMC and the many other businesses in Asia that represents the world’s key production base?
One of the ways to become part of this globally vital production base is to invest through the KTAM Asia Growth Equity Fund (Capital Accumulation share class) or KT-ASIAG-A.
KT-ASIAG-A is a Feeder Fund with an objective to invest solely in the master fund called JPMorgan Funds - Asia Growth Fund (Class I) which is managed by JPMorgan Asset Management, a globally renowned asset manager. The fund aims to maximize returns by investing in companies with strong growth potential in Asia (ex-Japan) and emerging markets. Top 5 countries that KT-ASIAG-A has the largest investments include:
- China 45.1%
- Taiwan 13.4%
- South Korea 11.1%
- India 10.5%
- Hong Kong 10.1%
Besides TSMC, KT-ASIAG-A also invests in other leading companies such as
- Tencent, the owner of WeChat, a hugely popular chat app in China. Tencent also developed games popular among Thais such as RoV. Tencent also has various other investments.
- Samsung Electronics, a world leader in the manufacturing of semiconductor chips and smartphones
- Alibaba, a leading tech firm and owner of a large e-commerce platform in China
KT-ASIAG-A is managed and operated by Krungthai Asset Management (KTAM) which is strong in international investments and business partners who are fund houses with global investment expertise, one of which is JPMorgan Asset Management, the manager of JPMorgan Funds - Asia Growth Fund (Class I) which KT-ASIAG-A currently invests in.
This shows KT-ASIAG-A is not only attractive for its potential for achieve performance growth by being part of a global manufacturing base, tapping Asia and emerging market growth. Investors also receive the comfort of investing with KTAM, a foreign investment expert.
KT-ASIAG-A, more info click https://www.ktam.co.th/fif-fund-detail.aspx?IdF=72&lang=en
Note: Investments contain risks. Investors must familiarize oneself with the product’s features, terms regarding financial returns and risks, before deciding to invest.
References
-https://www.semiconductors.org/chipmakers-are-ramping-up.../
-https://asia.nikkei.com/.../Global-chip-shortage-could...
-https://www.hpcwire.com/.../tsmc-reports-2021-second.../
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