UBS: APAC Tech: Key Themes into 2026 Across AI and Conventional Tech
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UBS highlights that artificial intelligence remains the primary growth catalyst heading into 2026, with hyperscaler capital expenditure revised upward to 63% and 11% year-over-year growth for 2026 and 2027, respectively. This exceeds previous estimates of 47% and 23%. Cost-effective ASIC and CPU deployments offer substantial upside, while server shipment growth is projected at 13% for 2026 and 8% for 2027.
Conversely, rising memory prices are pressuring traditional consumer electronics supply chains. Facing increased bill of materials (BOM) costs, brands are struggling, leading UBS to downgrade 2026 PC shipment forecasts to a 4% year-over-year decline and smartphone shipments to a 10% contraction. Global smartphone shipments are now pegged at 1,139 million units, with PCs at 255 million units.
Within the semiconductor value chain, performance is diverging. For IC design services, UBS favors firms with robust project pipelines, rating Alchip and GUC as Buy. In the fabless segment, the focus shifts to edge AI and discounted valuations, resulting in a Buy on Asmedia. For specialty semiconductors and assembly, the firm selects beneficiaries of rising prices, such as ChipMOS. In the display and hardware sectors, UBS identifies AI-related growth opportunities, assigning a Buy rating to Lotes while reiterating a Sell on Innolux.
Overall, total semiconductor revenue is forecast to hit $1,223 billion in 2026, driven largely by memory growth, even as conventional consumer endpoints face weakening demand.