My personal take on the opportunities within Asia is based on companies that can achieve leading positions in either their home markets, or regionally and globally. The Asian consumption story is well known but the new facet is the growth in commercialisation of home-grown intellectual property. The perception of Asian companies as copycats and consumers of Western innovation is now outdated. So a portfolio of Asian shares should extend beyond traditional consumption themes. Asian companies are climbing up the value chain, disrupting Western oligopolies and beginning to lead industry trends.
Taiwan’s leading-edge chipmaker
TSMC (Taipei: 2330) is the world’s leading semiconductor foundry, based in Taiwan. It is one of the very few players capable of producing the leading-edge microchips used in high-performance electronics and is well placed to capitalise on structural demand arising from digitisation, 5G and artificial intelligence. The outlook is positive: revenues are growing at 20% a year and the company will invest US$100bn in producing advanced microchips over the next three years.
The story of the semiconductor fabrication industry is one of consolidation. As the technological challenges and the costs of improving processing power have mounted, even Intel, historically at the forefront, has been struggling. This leaves just two Asian players standing, with TSMC leading in logic chips and Samsung Electronics in memory chips.
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Nidec (Tokyo: 6594) is a Japanese company that manufactures half of the world’s brushless direct current (DC) motors. The company has built its leading position via research and development over 50 years on delivering ever smaller, more powerful motors with superior energy-efficiency. It enjoys scale advantages and breadth in its end-markets, supplying sectors ranging from drones to robots and industrial machinery. It is now leveraging the same skill set into traction motors required for the global electric-vehicle (EV) market.
Nidec is targeting a 40%-45% share in a market with huge potential as the demand for EVs explodes, with new players entering the market including Apple and Xiaomi. Nidec’s strength as the core supplier of critical components allows it to benefit from the overall growth of the market.
Entertaining Gen Z
Bilibili (Hong Kong: 9626) is China’s go-to online entertainment platform targeting Generation Z, with over 200 million active users. It is a unique blend of Youtube, Twitch and Netflix, featuring user-generated content, live-streaming, e-sport hosting, and professional video productions.
It stands out among its countless peers, preserving a distinctive quirky identity thanks to its anime, comic and gaming (ACG) heritage. A community experience is cultivated through innovative interactions, encouraging high user engagement and retention. It also consciously curates an ecosystem supporting quality content and content-makers that will sustain creativity in the long run.
Businesses are increasingly turning to Bilibili to connect with China’s youth. The platform is expanding at an annual rate of over 70% with multi-faceted revenue streams; key areas include gaming, advertising and e-commerce.
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