Tech export growth outpaces non-tech in Asia, with widest gap in Thailand: Nomura
The three-month moving average for tech exports growth in Asia ex-Japan rose to 30.5 per cent year on year in May, from 17.1 per cent in January. By contrast, non-tech exports grew 5.7 per cent, versus 2.1 per cent.
'Tech exports and production have rebounded strongly in recent months, while non-tech has been tepid,' said Nomura analysts.
The divergence is the largest in Thailand, where the three-month moving average for tech exports grew 57.5 per cent year on year while non-tech exports increased 9.2 per cent.
India, Taiwan, Indonesia, Malaysia, South Korea and Singapore also followed a similar trend.
Front-loaded demand from the US, ahead of potential tariffs on semiconductors, have boosted tech exports. Additionally, rising memory chip prices have raised the value of chip exports and a Chinese consumer goods trade-in programme have increased demand for electronic components, according to the report.
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Artificial intelligence (AI) demand has driven Taiwan's tech export growth, while India's electronics exports have been boosted by the shift in smartphone assembly.
Conversely, non-tech exports have underperformed due to weak demand and pricing, as well as Chinese overcapacity.
'Demand outside the US remains tepid, including in Europe and China, reflecting soft consumption and structural factors. Within Asia, domestic consumption is also subdued across Indonesia, Korea, Thailand and India, reflecting the lagged effects of policy tightening and pandemic scarring effects,' Nomura analysts wrote.
Demand for AI should rise in H2
Looking ahead, the divergence is likely to widen even further in the second half of 2025, said Nomura economist Toh Si Ying, in response to a query from The Business Times.
AI tech demand is set to be 'the only bright spot', while non-AI tech will likely slow down after the third quarter, and non-tech exports will stay weak.
US tariffs are also set to dent demand for non-AI tech, as real purchasing power for US consumers will be eroded. The lower multiplier effects of AI-driven growth on upstream sectors – compared to investment in traditional infrastructure like roads – will lead to strong AI growth, but weaker non-AI tech and non-tech growth.
Regional growth is thus set to slow, with Asean nations particularly vulnerable due to front-loaded demand, high exposure to Chinese overcapacity and US scrutiny on transshipments.
To be sure, the divergent trend is not uniform across every Asian country. In China, non-tech export growth outpaced tech by 2.4 percentage points, while the Philippines had an even larger gap in favour of non-tech exports – at 21 percentage points.
Even before Trump 2.0, Asia was already dealing with a flood of cheap Chinese imports, making it harder for other countries to compete, said the report.
'Increased competition from China is weighing on industrial production (Thailand, Indonesia), delaying private capex (India), resulting in job losses in labour-intensive sectors (Indonesia, Thailand), adding to disinflation (metals, chemicals) and eating into export market share globally in non-tech sectors.
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