• Hong Kong’s recent export performance has been significantly boosted by robust AI-driven demand for electronics. With electronics accounting for more than 70% of total exports, overall export performance has benefited substantially from the ongoing AI-driven technology cycle, regardless of the ongoing geopolitical headwinds.
• A significant proportion of this recent export growth has been price-driven, with higher semiconductor prices boosting export values and reinforcing the overall strong performance. This impetus, however, is likely to moderate as the supply of electronic components expands and prices gradually normalise over time.
• Hong Kong, meanwhile, is playing a critical role in facilitating the flow of electronic parts and components between the Chinese Mainland, the ASEAN production bases and the global markets. Despite the anticipated price normalisation, Hong Kong’s renowned capabilities in the trade finance and trade-related services sectors, as well as the value-added activities of the city’s electronics cluster, will see it continue to benefit from the ongoing electronics upcycle over the medium term.

Accelerated AI Development and Electronics Upcycle

Over the past few months, global artificial intelligence (AI) development has accelerated markedly, driven by rapid advances in generative AI, large language models, as well as expanding application across enterprises. Major technology firms have significantly increased investment in AI infrastructure, while businesses across a wide range of sectors – including finance, manufacturing, healthcare, retail, logistics and professional services – have accelerated their adoption of AI‑enabled solutions. Governments are also prioritising AI as a distinct, strategic sector, launching supportive policies and funding initiatives. As a result, global demand for data processing and digital infrastructure has expanded rapidly, marking a new phase of sustained technological upgrade.

This acceleration in technological development has translated directly into strong demand for electronic products, particularly semiconductors and information and communication technology (ICT) equipment. AI applications require substantial computing capacity, creating demand for such high‑performance chips as GPUs, as well as other advanced processors and memory components.

According to an analysis by the World Trade Organization (WTO),[1] essential AI items include a wide range of raw materials, intermediate inputs, and the end‑products that support the development and production of AI hardware. Raw materials include semiconductors and foundational substrates, while intermediate inputs include processors and controllers, communication apparatus, and data centre infrastructure items. End‑products, meanwhile, tend to be regarded as such AI‑enabled systems as computer equipment.

These classifications are seen as hugely significant for the electronics sector. In the case of integrated circuits, for instance, their share of global trade rose from an estimated 4.7% in 2024 to 5.2% last year, representing year‑on‑year growth of 19% in value terms[2]. At the same time, the expansion of data centres, cloud infrastructure and edge computing has boosted demand for servers, networking equipment and storage devices. Beyond these core elements, demand has also risen for such supportive products as power management chips, sensors, cables and even printed circuit boards.

As AI adoption broadens, demand has come to extend across many other areas, including consumer electronics, industrial automation and the automotive sector. This AI‑driven impetus to electronics trade is in the findings of a survey conducted at a recent Hong Kong electronics fair, which saw participants designate AI as by far the most influential technology. (For details, please see: AI Surge Bolsters Electronics Industry from Geopolitical Headwinds)

Semiconductor Prices and Trade Dynamics

Importantly, this surging demand has driven up semiconductor prices, particularly in the case of memory chips and related products. Tight supply conditions, combined with strong AI‑driven demand for ordinary as well as high‑bandwidth memories and other advanced storage solutions, have led to notable increases in unit prices across many segments of the semiconductor market. Reflecting this trend, producer price indices (PPIs) in both the US and the Chinese Mainland have shown a marked increase since the start of 2026, with the related sub‑indices for semiconductors and other electronic components also rising. Such price movements provide clear evidence of ongoing AI‑driven expansion, highlighting both the strength of demand for components and the continued tightness of the global electronics supply chain.

As a result, at least part of the recent global growth in electronics trade is down to price effects. Trade values have risen sharply, while sales volumes have increased at a more moderate pace, partly due to supply constraints. This distinction is critical in any analysis of the current situation, with the recent trade upswing partly supported by elevated pricing conditions. Looking ahead, ongoing capacity expansion in the semiconductor industry, particularly in the case of memory production, may gradually ease supply constraints, leading to downward momentum in terms of unit prices as time goes by. This, in turn, could result in a moderation in trade value growth, even if underlying demand for electronics remains resilient.

The surge in electronics demand has also stimulated international trade, particularly within the Asian supply chains. The semiconductor industry remains fragmented across multiple regions, typically involving design in advanced economies, fabrication in specialised hubs, and assembly across multiple economies. As demand for AI‑related products has increased, cross‑border trade in intermediate goods, including chips, modules and sub‑assemblies, has intensified within the supply chains. At the same time, finished ICT products and semi‑manufactures are being shipped to major end‑markets, including the US and the EU, and to many emerging economies engaged in digital transformation. This has contributed to a surge in the global electronics trade in electronics, one that has weathered the broader uncertainties arising from ongoing geopolitical tensions and changing trade policies.

Hong Kong’s Role in the AI-Driven Trade Cycle

Against this backdrop, Hong Kong has benefited significantly from its role as a key re‑export hub for many global electronics supply chains. In all, as electronic products account for more than 70% of Hong Kong’s total exports, the recent surge in AI‑related demand has translated into strong export performance. As a regional trading platform, Hong Kong facilitates the movement of electronic components and semi‑finished products between the Chinese Mainland, the ASEAN production bases and such major global markets as the US. Notably, the export value of certain key items – including memory devices, computer parts and accessories, processors and controllers, as well as other telecommunications and ICT equipment – rose by 70% year‑on‑year in January‑May 2026. This saw such items account for 57% of Hong Kong’s total exports during the period, up from 44% in 2024 and 49% in 2025.

Source: Census and Statistics Department, HKSAR; HKTDC

Overall, increased demand for semiconductors and semi‑manufactured electronics, particularly memories and AI‑related modules and chips, has driven a sharp rise in re‑export values via Hong Kong, reinforcing the city’s key role within regional supply chains. In line with global trends, however, part of the increase in value of such trade reflects higher unit prices rather than a commensurate expansion in physical volume. In particular, memory chips alone accounted for about 15.7% of Hong Kong’s total exports in January‑May 2026, with the surge in export value driven not just by robust demand, but also by elevated prices. This underscores the fact that recent trade growth is partly price‑led, reflecting tight supply in the electronics market and strong AI‑driven demand for advanced components.

Source: Census and Statistics Department, HKSAR; HKTDC

Sustained Demand amid Price Normalisation

Looking ahead, continued expansion in AI investment and applications is expected to sustain demand for electronics and support Hong Kong’s trade performance in the near term. The durability of this momentum, however, will depend on such factors as the pace of semiconductor capacity expansion, the evolution of AI business models, and the trajectory of global demand. As supply conditions normalise and prices moderate, strong growth in trade value may ease, even if underlying trade volumes continue to improve. In addition, geopolitical developments, supply chain restructuring and regulatory measures could contribute to further uncertainty.

Nevertheless, Hong Kong remains well‑positioned to capture the opportunities arising from AI‑driven global trade, particularly by enhancing its role in the high value‑added services sector, supply chain management and financial intermediation. Value‑added services from the city’s local electronics cluster – ranging from design solutions, engineering, and application development to project management, marketing and customer services – also look set to continue to support and sustain Hong Kong’s electronics export performance over the medium term.

[1] “World Trade Report 2025: Making trade and AI work together to the benefit of all”, WTO

[2] Compilation by HKTDC Research, based on trade data from the International Trade Centre