Nvidia's strategic pivot toward "physical AI"—artificial intelligence powering robots, autonomous vehicles, and industrial systems—is driving a significant shift in its supply chain, with Asian suppliers now accounting for roughly 90% of its production costs, up from 65% a year ago, according to Bloomberg data. This deepening reliance on Asian manufacturing is fueling a rally in related stocks across the region, as investors look beyond traditional data-center chips to a broader AI ecosystem.
Shares of LG Electronics, Nanya Technology, Huizhou Desay SV Automotive, and Pateo Connect Technology Shanghai all rose last week following reports of new partnerships or supply-chain connections with Nvidia. The moves reflect growing investor enthusiasm for companies tied to Nvidia's expanding hardware ambitions, which now span robotics, automotive, and memory technology.
Nvidia's stock last traded at $198.45, down 0.6%, with U.S. markets closed Sunday. The company's market capitalization stands near $4.86 trillion. As U.S. markets prepare to reopen Monday, analysts expect renewed focus on Nvidia's supply-chain dynamics and the implications for Asian tech players.
Ling Vey-Sern, managing director at Union Bancaire Privee, noted that global tech giants like Nvidia are increasingly dependent on Asian supply chains. "Physical AI is likely to fuel even greater demand for the region's suppliers already linked to AI chip production," he said. This trend is already evident in Nvidia's partnerships with key memory suppliers SK Hynix and Samsung Electronics.
Samsung Electronics reported its chip unit's quarterly profit surged 49-fold, and warned of possible supply constraints if AI demand continues to escalate. The company also confirmed it is now supplying HBM4 memory chips for Nvidia's Vera Rubin platform. This underscores the critical role Asian suppliers play in Nvidia's AI hardware ecosystem.
LG Electronics recently held talks with Nvidia about potential collaboration on robotics, AI data centers, and mobility. Madison Huang, Nvidia's senior director for physical AI platforms, visited LG along with other South Korean firms, signaling deeper ties between the chipmaker and Asian hardware companies.
Nvidia CEO Jensen Huang has positioned robotics as a central pillar of the company's AI strategy. "Physical AI has arrived," Huang declared in March, unveiling new collaborations with robotics firms and predicting that more industrial companies will transform into robotics enterprises. This vision is driving Nvidia beyond its core GPU business into domains where hardware, sensors, and simulation technology are as important as the chips themselves.
Marvin Chen, strategist at Bloomberg Intelligence, believes the broadening demand for AI is pulling more suppliers into the expansion, which could keep "tech-heavy north Asian markets" ahead of the pack. However, the trade is becoming crowded, hinging on sustained Nvidia demand, continued contract wins for Asian firms, and the absence of disruptive U.S. export restrictions.
Last week, Reuters reported that Nvidia's B300 servers were fetching about $1 million each in China, as tighter restrictions and a clampdown on smuggling squeezed supply. Nvidia confirmed the B300 is barred from China and warned that "unlawful diversion is a recipe for failure."
Rajeev De Mello, portfolio manager at Gama Asset Management, views Asia's technology base as a structural advantage, especially as AI's appetite extends across semiconductors, components, servers, and the entire hardware ecosystem. Nvidia's position, he suggests, is less that of a standalone chipmaker and more of a hardware lynchpin in the global AI supply chain.
