Taiwan’s economy grew faster than expected in 2025, posting an 8.6% expansion rate that the government said was the quickest pace in 15 years, driven by surging export orders tied to artificial intelligence. Taiwan’s statistics agency released the advanced estimate on Friday, and it topped economists’ forecasts as the strongest growth rate since 2010.
The report attributed the acceleration largely to demand for Taiwan-made technology products, including AI servers, computer chips, and precision instruments. It said exports increased nearly 35% last year compared with a year earlier, with technology-related shipments leading the gain.
The AI-led boom also helped boost Taiwan’s sales to the United States, according to the report, which said shipments to the U.S. rose 78% from the prior year. Taiwan’s export-focused industries benefited from “the frenzy over artificial intelligence,” the report said, with the U.S. providing a major destination for the technology demand.
Earlier this month, Taiwan reached a trade agreement with President Donald Trump’s administration that included tariff relief for Taiwan-bound imports, a step the report said was linked to higher export momentum. The deal lowered U.S. tariffs on imports from Taiwan to 15% from 20%, in exchange for pledges of at least $250 billion in investment in the United States in areas that included semiconductors and AI.
Economists at Bank of America said the trade-linked and AI-driven demand should continue to support Taiwan’s export performance. In a note cited by the report, analysts Xiaoqing Pi and Helen Qiao wrote that they expected AI-related demand to continue underpinning Taiwan’s exports into 2026, supporting overall growth amid ongoing global AI investment.
The report said the AI boom has translated into record results for Taiwan’s technology firms, including TSMC, the world’s largest contract chipmaker, and Foxconn, an electronics manufacturer known for assembling products and for producing components used in AI servers. It said TSMC counts Nvidia as a key client and described Foxconn as making AI servers for Nvidia and assembling products for Apple.
Still, the report said growth this year may slow as Taiwan builds on a high base and as export demand becomes harder to maintain at the same pace. It cited Deutsche Bank’s estimate of 4.8% growth in 2026 and said concerns about the AI boom becoming a bubble were among key risks.
Uncertainty about U.S. tariff policy under Trump also presents a worry, the report said, alongside geopolitical tension involving Taiwan and China. It said China claims Taiwan as its own territory and that China conducted large-scale military drills around Taiwan in late December, renewing concerns about a possible blockade or seizure.