16 July 2026
In the first half of 2026 SK Hynix gained 280.3%, Samsung Electronics rose 160.5% and TMSC inched ‘just’ 54.3% higher. The combined weighting of these three stocks reached 34.4% of the MSCI AC Asia ex Japan Index as at 30th June 2026. An extraordinary concentration which more or less matches the Magnificent Seven trade and, in index concentration terms, probably exceeds it. Active managers conforming to the UCITS concentration rules have struggled.
This Asia tech ‘bubble’ is widely referred to as the ‘picks and shovels’ trade. A reference to the traders who sold the equipment to gold prospectors in the mid 19th century and, more than likely, made most of the money. Levi Strauss was probably the most famous player in the Witwatersrand Gold Rush in the Transvaal, SA.
The bubble may have burst. By 14th July SK Hynix had tumbled 24.9%, Samsung Electronics 18.1% and TSMC a lesser 0.7%. TSMC posts second quarter results today and forward guidance on revenue growth, gross profit margins and CAPEX will be the focus of shareholders and analysts alike.
We have read reports that the build out of data centres (which need the High Bandwidth Memory chips) in the United States may face stiff opposition from local communities while there are very justifiable concerns that the American electricity grid simply cannot cope with this outsized increase in the demand for power.
All of the above is relatively well known.
Much more interesting to us is the forthcoming listing of ChangXin Memory Technologies Inc. The listing of CXMT, and prodigious growth thereafter, will probably present the biggest long term challenge to the Asian Tech Trio. China – the largest economy in the world by far in purchasing power parity terms – has an exemplary record of muscling its way in global industries. Watch this space.