The United States and China have agreed on a “framework” to extend their trade truce following high-level talks in London. Under the agreement, China will ease restrictions on the supply of rare earths to the US. In exchange, the US has indicated willingness to lift recent curbs on chip-design software, jet engine components, chemicals, and nuclear materials, while maintaining export controls on Nvidia AI processors.

However, uncertainty remains around US tariffs affecting other sectors, especially as the current 90-day pause on “reciprocal” tariffs is set to expire on July 8. This is particularly true in the case of the technology sector in the Asia-Pacific region, which is dominated by the assembly and export of consumer electronics.

Fitch Ratings has revised its 2025 outlook for the APAC technology sector from “neutral” to “deteriorating”. The revision reflects the negative impact of tariff wars on consumer confidence, along with weaker global consumer spending and slower economic growth.

Compared to other regions, Asia-Pacific is more exposed to these challenges, as it serves as the world’s primary assembly hub for technology hardware. According to Statista, APAC accounted for over 90% of global semiconductor assembly, testing, and packaging ( ATP ) capacity in 2022, with China leading at 30% and Taiwan at 27%. In recent years, Asean countries and India have been playing an increasingly important role in the global semiconductor assembly business.

Consumer technology hardware products are typically discretionary purchases, which consumers can easily defer when confidence weakens or spending slows. Hardware sales are currently facing tough conditions in many markets.

On April 8, Fitch revised the outlooks for the US retail and consumer products sectors from “neutral” to “deteriorating”. The rating agency forecasts that consumer spending growth in the eurozone, Japan, and the United Kingdom will be weak in 2025 at 1%, 0.7%, and 0.9%, respectively. For China, the consumer spending growth forecast is relatively robust at 3.3%, though still below the 4.3% projected in December 2024.

India and China have shown more resilience in the technology sector. Fitch has a “neutral” outlook for China’s internet subsector in 2025. It expects major internet companies to maintain strong business profiles, robust margins, and significant net cash positions, which should help support their credit profiles. However, performance may diverge among firms due to a mix of challenges and growth opportunities, including weak consumer spending, intense competition, and the increased deployment of AI across internet services.

The outlook for the Indian IT services sub-segment also remains “neutral”. Although Fitch expects revenue growth to be affected by the global economic slowdown and tariff-related uncertainty – leading to more cautious customer spending on external IT services – it believes both revenue and Ebitda growth will remain positive.