High-quality technology stocks are often associated with Silicon Valley, but stellar tech plays can be found in most emerging market countries as well.

In a year when the emerging markets went from hot to not in the blink of an eye thanks to improved growth in the developed world, emerging market tech stocks defied the trend and broadly outperformed in 2013.

Growing labor costs in much of the developing world have contributed to the rise of the emerging market technology sector. Just as manufacturers in the US turned to automation to control labor costs back in the 1990s and 2000s, the same trend is emerging in China and many other developing markets.

Myriad technologies ranging from computer programming, hardware development and even web-based controls are required to support that shift, giving rise to new tech companies the world over.

While the rise of the Internet hasn’t been nearly as disruptive to the young economies of the East as it was to the old economies of the West, it has also spurred a wave of innovation.

North America has the greatest Internet penetration rate at 78.6 percent, but Asia is now by far home to the most Internet users. The former is home to an estimated 273.8 million users, but there are nearly 1.1 billion Internet users within the latter, despite a penetration rate of only 27.5 percent. That means there’s still plenty of room to grow in Asia.

The statistics for mobile devices and smart phones look much the same, making emerging market tech companies some of the most attractive in the world.

Tencent Holdings (Hong Kong: 0700, OTC: TCEHY) is an excellent case in point.

Founded in 1998 as an Internet service portal, Tencent has grown to become one of China’s largest and most used, offering instant messaging services, value-added services, wireless Internet (i.e. smart phones), ecommerce and Internet advertising.

While the company’s traditional Internet offerings continue to drive profitability, its wireless valued-added services have proven a huge boon as China breaks all records in smart phone penetration. Mobile users totaled 330 million last year, a huge 150 percent year-over-year increase.

Largely thanks to Tencent’s exposure to that trend, revenues have shown three-year average growth of more than 52 percent, while earnings per share (EPS) have risen by 34.8 percent. That’s allowed to company to make record setting investments in technology development, recently launching an innovative new open platform for mobile development to attract application developers. The company also purchased a logistics firm to support its online shopping business.

Thanks to those and other strategic moves, while the Hang Seng Index returned just 2.8 percent last year, Tencent shares shot up by nearly 100 percent over the course of 2013.

Baidu (NSDQ: BIDU), China’s answer to Google (NSDQ: GOOG), experienced a similar outperformance. As the leading search provider in China, the company is winning a greater share of online advertising budgets across Asia. In the trailing year alone revenues have grown by nearly 63 percent on a year-over-year basis while EPS has been growing by an average of 10 percent, as the company continues to invest heavily in research and development.

While the technology gains in countries other than China haven’t been quite as exaggerated, shares of Indian IT consultancy Infosys (NYSE: INFY) gained 35 percent last year and Wipro (NYSE: WIT) was up 43 percent.

Also based in India, Wipro develops both hardware and software infrastructure to support users in the public and private sectors.

Technology has become a much more global game than it was just a decade ago and, with most of the real growth to be found outside of the US, tech investors must cast a much wider net than they have in years past. That should be well worth the effort this year.

The Consumer Electronics Association (CEA) estimates that global spending on technology will fall by 1 percent this year to $1.06 trillion. That’s largely due to declining smart phone and tablet prices, since the CEA sees no change in overall consumer demand. Consequently, some of the best technology bets will be those focused on underpenetrated parts of the world where what is lost in price will likely be made up in sheer volume thanks to the size of the markets.

Portfolio Updates

Taiwan Semiconductor (NYSE: TSM) reported that its net profit grew by nearly 8 percent year-over-year in the fourth quarter, reaching TWD44.8 billion (US1.4 billion) and beating analysts estimates of TWD42 billion. Revenue was up by almost 11 percent versus last year to TWD145.8 billion (USD48.5 billion). Quarterly EPS came in at TWD1.73, down 13.7 percent on a sequential basis and up 7.7 percent year-over-year.

While smart phone sales have slowed, growing tablet sales helped pushed the improved results with Taiwan Semiconductor’s 28 nanometer chip being particularly popular in those mobile applications and accounting for 34 percent of revenue.

Full-year revenue totaled TWD597 billion, a 17.8 percent gain over 2012. Diluted EPS for 2013 gained 13.1 percent to come in at TWD7.26.

Management said that it expects to take in revenue of between TWD136 billion and TWD138 billion for the first quarter of this year, representing double-digit growth, as new wearable devices continue to gain in popularity. That should prove an excellent market for its new 16-nanometer chips, which are slated to go into production later this year.

The markets are clearly pleased with the company’s results, with shares up by nearly 2 percent in pre-market trading. I continue to rate Taiwan Semiconductor a buy up to 20.

When Unilever (NYSE: UN) announces fourth-quarter and full-year results on Tuesday, I expected earnings to essentially be flat compared to the prior year. Tepid growth in Europe and turbulent emerging market economies, which both account for just more than half of the company’s revenue, over the course of 2013 likely constrain spending on many branded consumer goods.

As a result, I look for Unilever to post full-year EPS of about EUR2.08 on revenue of about EUR50 billion. Last year’s actual results were EPS of EUR2.09 on EUR51.3 billion in revenue.

While my baseline expectation isn’t particularly optimistic, Unilever does have a history of surprising to the upside. That’s largely thanks to the fact that the company has invested heavily in optimizing its marketing and distribution systems and that program has been paying dividends.

Additionally, I expect sales and earnings to pick up in 2014 as Europe slowly returns to growth and economies of the stronger emerging market nations where Unilever primarily does business hold their own.

Continue buying Unilever up to 46.

Freeport McMoRan Copper & Gold (NYSE: FCX) will release its full-year results on Wednesday and I can see little reason for optimism. EPS is likely to come in around $2.80, largely thanks to weakness in both gold and copper prices though bolstered somewhat by continued divestment of non-core properties.

But again, I look for 2014 to be a better year thanks to an improved global growth profile which, while not necessarily benefiting gold prices, should boost the price of copper and other metals. That should result in EPS closer to $3.00 for 2014 which, along with firming prices, will boost Freeport McMoRan’s shares this year. Continued production growth of copper, gold, oil and gas will also help offset some of the price weakness.

Freeport McMoRan Copper & Gold’s shares remain a buy up to 42.

Forthcoming Portfolio Earnings Announcements in January:

Keppel Corp (OTC: KPELY) – Full-Year 2013 – 1/24
Chungwa Telecom (NYSE: CHT) – Q4 – 1/29
Banco Bradesco (NYSE: BBD) – Q4 – 1/30
Daiwa Securities Group (Tokyo: 8601) – Q3 2014 – 1/31