HSBC: AI Capital Spending Is Extending Asia’s Automation Upswing Beyond Expectations
HSBC said Asia’s automation industry is in a more durable upswing than expected, supported by AI capital spending, with no signs of a slowdown.
HSBC said Asia’s automation industry is in a more durable upswing than expected, supported by AI capital spending, with no signs of a slowdown.
The current upcycle began in the third quarter of 2025 and has been running for about a year. Investors had been concerned that it could peak in the second quarter of 2026, but HSBC said it found no evidence of a slowdown. Key data points were broadly strong: Fanuc orders rose 37% year over year, SMC orders increased 56%, THK orders climbed 70%, and Hiwin revenue grew 27%.
Most companies significantly raised their 2026 revenue guidance and now expect growth of 7% to 29%, compared with 3% to the low double digits previously. Order visibility remains strong through the end of 2026, driven by demand for AI servers and semiconductors. Japanese machine-tool orders rose 62% year over year, while Chinese industrial-robot output increased 48%.
HSBC’s preferred names are Hiwin, which has more catalysts from monthly sales and margin improvements; Fanuc, where concerns about margin pressure appear excessive; Inovance, which benefits from industrial AI; and Zhaowei, which has exposure to its dexterous-hand business.
In a one-line conclusion, HSBC said AI capital spending is driving Asia’s automation industry into a longer-than-expected period of strong growth, with order visibility strong through year-end and pullbacks offering opportunities to build positions.
The report identified Hiwin (2049 TW, with 18% upside), Fanuc (6954 JP, with 16% upside), Inovance (300124 CH, with 49% upside), and Zhaowei (2692 HK, with 121% upside) as beneficiaries. Risks include a stronger yen and rising raw-material costs. HSBC said current market concerns that the automation cycle may be nearing a peak could be excessive and that the persistence of AI-driven demand may not yet be fully priced in.
Catalysts cited by HSBC include each company’s second-half results and order data, the persistence of AI-server and semiconductor capital spending, and the effect of yen exchange-rate movements on exporters.
The current upcycle began in the third quarter of 2025 and has been running for about a year. Investors had been concerned that it could peak in the second quarter of 2026, but HSBC said it found no evidence of a slowdown. Key data points were broadly strong: Fanuc orders rose 37% year over year, SMC orders increased 56%, THK orders climbed 70%, and Hiwin revenue grew 27%.
Most companies significantly raised their 2026 revenue guidance and now expect growth of 7% to 29%, compared with 3% to the low double digits previously. Order visibility remains strong through the end of 2026, driven by demand for AI servers and semiconductors. Japanese machine-tool orders rose 62% year over year, while Chinese industrial-robot output increased 48%.
HSBC’s preferred names are Hiwin, which has more catalysts from monthly sales and margin improvements; Fanuc, where concerns about margin pressure appear excessive; Inovance, which benefits from industrial AI; and Zhaowei, which has exposure to its dexterous-hand business.
In a one-line conclusion, HSBC said AI capital spending is driving Asia’s automation industry into a longer-than-expected period of strong growth, with order visibility strong through year-end and pullbacks offering opportunities to build positions.
The report identified Hiwin (2049 TW, with 18% upside), Fanuc (6954 JP, with 16% upside), Inovance (300124 CH, with 49% upside), and Zhaowei (2692 HK, with 121% upside) as beneficiaries. Risks include a stronger yen and rising raw-material costs. HSBC said current market concerns that the automation cycle may be nearing a peak could be excessive and that the persistence of AI-driven demand may not yet be fully priced in.
Catalysts cited by HSBC include each company’s second-half results and order data, the persistence of AI-server and semiconductor capital spending, and the effect of yen exchange-rate movements on exporters.