Asia Fund Beating 95% of Peers Is Bullish on Chip Gear Makers

JPMorgan Asset Management's $2.1 billion Asia Pacific Equity Fund, managed by Oliver Cox, which has outperformed 95% of its peers this year, maintains a bullish outlook on chip equipment makers. Cox views these suppliers as "customer-agnostic," poised to sustain growth by providing essential tools to the semiconductor industry regardless of which Chinese chip producers emerge as leaders, effectively adopting a "picks and shovels" investment strategy in the sector.

Analysis

A top-performing fund manager at JPMorgan Asset Management is articulating a bullish thesis on Asian chip equipment suppliers, framing them as a "picks and shovels" play on the Chinese semiconductor industry. The manager, Oliver Cox, whose $2.1 billion Asia Pacific Equity Fund has outperformed 95% of its peers this year, argues that these equipment makers are "customer-agnostic." This positioning allows them to benefit from broad capital investment across the sector, insulating them from the specific risks of which individual Chinese chip producers emerge as market leaders. This investment approach is particularly noteworthy given the context that Chinese chipmakers are trading at a four-year high versus their US counterparts, suggesting that while end-producers may be richly valued, opportunities for growth may exist further up the supply chain.

Key Decisions for Investors

• Investors seeking exposure to the Chinese semiconductor industry should consider focusing on equipment suppliers to mitigate single-company risk associated with picking winners among the chip producers.
• Given that Chinese chipmakers are trading at multi-year highs against US peers, the upstream equipment sector may offer a more attractive risk-reward profile for capitalizing on the industry's growth.
• The "customer-agnostic" nature of these suppliers suggests they could provide more stable, sustained growth, making them a potentially valuable addition to a portfolio focused on the Asian technology theme.