Get you up to speed: Taiwan’s economy is booming thanks to AI. Not everyone sees the benefits
Taiwan’s economy is experiencing significant growth, with a GDP increase of 13.69 percent in the first quarter of 2026, largely driven by semiconductor exports. The Taiwan Semiconductor Manufacturing Company (TSMC) plays a crucial role in this expansion, accounting for over 20 percent of the country’s GDP and more than 40 percent of the value of its stock market.
Taiwan’s GDP growth reached 13.69 percent in the first quarter of 2026, contributing to a total export surge of 34.9 percent in the previous year. Despite this economic upswing, only about 300,000 individuals are employed in the semiconductor sector out of a total workforce of 11 million, highlighting a growing disparity in job distribution.
Taiwan’s Central Bank Governor Yang Chin-lung has warned of an emerging “K-shaped economy,” highlighting the disparity in growth between the semiconductor sector and other industries. Meanwhile, a recent survey found that 40 percent of Taiwanese voters expressed financial anxiety, primarily due to rising living costs, particularly housing.
What remains unclear — It is uncertain how policymakers plan to address the growing wealth inequality as Taiwan’s economy transitions towards a tech-centric model.
Taiwan’s economy grows significantly due to AI, but benefits are unevenly shared
News|Business and EconomyTaiwan’s economy is booming thanks to AI. Not everyone sees the benefits
Taiwan is experiencing explosive GDP growth due to chip exports, but some Taiwanese feel left out.
People stand on the street as they shop for food at Nanjichang Night Market in Taipei, Taiwan, May 17, 2026 [Ann Wang/Reuters]
Taipei, Taiwan – For Li, an engineer at Taiwanese computer giant ASUS, the AI boom sweeping Taiwan has made it an exciting time to work in tech.
Taiwan is a semiconductor powerhouse, producing about 90 percent of the most advanced chips used to power leading AI models such as ChatGPT and Claude.
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“I’ve felt Taiwan’s tech and computer industry becoming more vibrant,” Li, who asked not to be identified by his real name, told WTX News, pointing to events such as the upcoming Computex tech and AI expo running from June 2 to 6.
Still, Li worries that the spoils of Taiwan’s AI windfall are not being shared equally.
“Most industries unrelated to tech don’t seem to be feeling the benefits, so it doesn’t feel evenly distributed at the moment,” Li said, explaining that many of his former classmates working outside of tech do not appear to be doing as well.
“It’s mainly the industries at the front of this tech wave that are benefitting.”
Taiwan’s economy is growing at a pace that would be the envy of any country.
Gross domestic product (GDP) rose 8.63 percent in 2025, followed by a heady 13.69 percent expansion in the first three months of this year.
Students dressed in white protective suits and face masks visit a clean room as part of a summer camp organised by US chip designer Synopsys with the goal of attracting more youth to Taiwan’s semiconductor industry, in Hsinchu, on July 18, 2025 [Ann Wang/Reuters]
Exports surged 34.9 percent last year to $640.7bn, with more than two-thirds of the total being tech-related goods and services.
Semiconductors alone account for more than 20 percent of Taiwan’s GDP, according to US trade data, with the vast majority of production handled by Taiwan Semiconductor Manufacturing Company (TSMC), whose top customers include Nvidia and Apple.
TSMC by itself accounts for more than 40 percent of the value of the island’s stock market.
While impressive, the rapid economic expansion has raised concerns about being overreliant on the growth of AI.
Taiwan’s Central Bank Governor Yang Chin-lung has sounded the alarm about an emerging “K-shaped economy,” where certain sectors grow rapidly while others fall into stagnation.
While critical to Taiwan’s economy, the semiconductor industry is far from the largest source of jobs.
The sector employs only about 300,000 people in a workforce of 11 million, according to data compiled by Dachrahn Wu, director of National Central University’s Research Center for Taiwan Economic Development.
The broader electronics and IT manufacturing industry employs about one million people, compared with about seven million working in the service sector, according to Wu’s data.
The heavy reliance on a single industry for growth marks a shift from the Asian Tiger era of the 1960s to 90s, when Taiwan’s economy was driven by hundreds of thousands of small and medium-sized enterprises (SMEs), according to James Lin, a historian who specialises in Taiwan’s post-war economic transformation.
“From the 1970s to 1990s, economic growth was concentrated in the hands of small and medium family enterprises that exemplified the ‘living room factory’ model, where family-owned businesses focused on producing one part for a consumer product,” Lin told WTX News.
“The benefits of this period were thus more widely distributed across Taiwanese society,” Lin said.
“By contrast, today, wealth inequality is growing in Taiwan as land is becoming more expensive and large corporations like TSMC attract the lion’s share of foreign capital investment rather than small corporations.”
Alicia Garcia Herrero, chief economist for Asia Pacific at French investment bank Natixis, said Taiwan’s economic model has left it at risk of becoming a “dual society” where tech sweeps up talent, funding and resources at the expense of other industries.
“It’s very hard if you’re not in [the semiconductor] sector in Taiwan right now,” Garcia Herrero told WTX News, pointing to low wages for workers in non-tech roles and rising costs for businesses.
Some of Taiwan’s challenges are out of its control, said Chao-Hsi Huang, associate dean at the Taipei School of Economics and a former director at Taiwan’s central bank.
Those challenges include US President Donald Trump’s tariffs, which have partially exempted semiconductors but hit exporters in non-tech industries.
“The traditional [manufacturing] sector suffers higher tariffs than other competing countries like Korea or Japan, or even Southeast Asian countries, due to the fact we are not able to sign free trade agreements,” Huang told WTX News.
“We are treated differently, and that’s a difficulty we are facing.”
Critics have placed other issues on the shoulders of the government, including a weak currency that has made exports more competitive but chipped away at consumers’ purchasing power.
Taiwan’s government denies engaging in currency manipulation, though it acknowledges intervening in the market to smooth out “volatility” when the new Taiwan dollar falls or rises sharply against other currencies.
After two decades of stagnation through the 2010s, wages are growing again – albeit unevenly.
Real average wages grew 1.4 percent in 2025, while median wages rose 1.35 percent, according to the Directorate-General of Budget, Accounting and Statistics (DGBAS).
Still, 70 percent of Taiwanese earned less than the average, a statistic attributable to the distorting effect of much higher salaries in the tech sector, where pay is nearly double the national average.
A miniature-sized wafer sorter machine model by Rorze on display at the Science Park Exploration Museum in Hsinchu, Taiwan, on February 6, 2023 [Ann Wang/Reuters]
For Taiwanese frustrated with stagnant pay, Taiwan’s soaring stock market has offered some consolation.
Riding the AI boom, the Taiwan Stock Exchange (TWSE) more than doubled in value between 2019 and 2025 to $2.2 trillion, according to HSBC.
Regulatory changes introduced in 2020 made it easier for small-time investors to buy single stocks, encouraging a rush of everyday Taiwanese into the market.
In January, the TWSE reported that the number of trading accounts had reached 13.77 million – equivalent to 60 percent of Taiwan’s population – while hailing the bourse as a “cornerstone for inclusive prosperity and shared growth”.
Though more equal than neighbours such as Singapore, Hong Kong and China, Taiwan’s wealth divide has grown over the decades.
In 1980, Taiwan had a Gini coefficient of 0.308 – a measurement of wealth distribution where 0 indicates perfect equality – putting it on par with contemporary Norway, according to the DGBAS.
By 2024, Taiwan’s Gini coefficient had grown to 0.341 – lower than many countries but still a significant rise.
“I feel that the benefits of economic growth haven’t been distributed evenly,” Ryan, an engineer in the local tech sector who asked not to be identified by his real name, told WTX News.
“Some industries or asset holders benefit significantly, but ordinary office workers often experience a rise in prices and housing costs, rather than an easier life,” he said.
Wei-ting Yen, an assistant research fellow at the research institution Academia Sinica, said while the semiconductor and stock market booms have helped some Taiwanese, they have heightened the angst of others.
In a survey of 1,195 Taiwanese voters carried out last month, 40 percent said their household was financially either “anxious” or “very anxious” due to rising living costs, particularly housing.
“I think subjectively, they’re anxious that they’re not accumulating wealth and it’s not enough to help them buy a house or an apartment,” Yen told WTX News.
“Housing prices have been going crazy worldwide, and the stock market has been going crazy, [but] for people who do not have extra money to invest in those two options, it creates even more frustration and anxiety around them,” she said.