Asia's Growth Now Belongs To Silicon Valley

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They built vast reserves, deepened local bond markets and chased customers on every continent to diversify their export bases.

In 1997, the threat came from hot money spread across thousands of funds. Today it rests with the purchasing teams of perhaps five US tech companies.

These companies answer to shareholders in New York, and shareholders eventually ask when a spending boom will pay for itself. When they do, the cuts will land first on suppliers abroad.

Trimming an order from a foreign supplier costs no American jobs and angers no American voters. It is the easiest saving a chief executive can find.

In South Korea, exports jumped 83.5% in September to a record $120.9 billion, half of it chips. Two chipmakers account for 43% of the Kospi's value. The country's trade figures and its main stock market now move largely with investment decisions made on another continent.

Central banks across the region will likely set interest rates on forecasts that hinge on Silicon Valley's corporate guidance, a first.

Finance ministries will plan budgets around export revenue that assumes capital spending keeps rising. Currencies strengthen on chip earnings and squeeze every exporter selling anything else.

Ministers drafting next year's budgets are, in effect, forecasting the mood of boardrooms they can't see inside.

Asian governments can't meaningfully tax these companies, regulate them or vote them out. The World Bank says the cycle is still gaining speed, and each quarter of growth raises the drop the region faces if spending turns.

Yet American capital can't build a single data center without servers, chips and components from Asian plants.

Few places can match the region's mix of skilled labor, supplier networks and manufacturing scale and replicating it elsewhere would take a decade. And Asia holds far more bargaining power than it uses.