Democratic Sweep Would Bring Tougher AI Oversight
US midterm elections will be held on the 3rd, with polls and prediction markets showing Republicans are likely to lose control of the House of Representatives, while the Senate outlook is more uncertain. Strategists say if Democrats take both the Senate and House, the AI industry and data-center buildout could face stricter scrutiny, with stronger congressional checks on trade and technology policy. If Republicans retain control of both chambers, policy is expected to be more continuous, favoring chipmakers in South Korea and Taiwan and suppliers benefiting from the US tech boom.
Taiwan, South Korea Supply-Chain Roles Crucial
Many advanced semiconductors and other key hardware needed for US data-center buildout are supplied by South Korea and Taiwan, deepening Asia's stake in the AI investment boom. Potential scrutiny includes requiring AI developers to bear more of data centers' power costs, and if that drives up infrastructure and power costs or makes development harder, it could deepen investor concerns over AI's huge spending and debt burden. Investors already face high borrowing costs and are questioning how long the memory-chip boom can last and whether debt-funded AI infrastructure spending can pay off.
Institutions Warn of AI Stock Pullback Risk
Wool, portfolio management head at Rayliant, warned that if Democrats take both chambers, related concerns could trigger another pullback in AI stocks, and any factor threatening AI development would hit confidence in South Korean, Taiwanese and Japanese equities hard, with Chinese equities also affected. Raman, executive director in OCBC Bank's wealth advisory unit, noted that some funds have already rotated from AI stocks into financials, health care and utilities, and any developments around US AI infrastructure, data-center development or technology restrictions could eventually affect Asian supply chains.
Structural Demand Still Strong, Post-Election Variables to Watch
Investors generally expect that no matter which party controls Congress, global demand for AI computing power and infrastructure will remain strong. Prouksa, head of Asia-Pacific equities at abrdn, stressed that South Korean and Taiwanese chipmakers remain indispensable to structural investing and are well positioned to weather different election outcomes, naming TSMC, Samsung Electronics, SK Hynix, Foxconn Precision, Quanta Computer, Advantest and Delta Electronics as worth watching. US President Trump still holds veto power and has broad authority over tariffs, immigration and foreign policy, limiting Democrats' ability to change the core of his agenda.