Jason Sung sells homes near a high-tech industrial park in northern Taipei, and his bet is that demand tied to artificial intelligence will keep pulling property values upward. The catalyst, he says, is Nvidia’s plan to build its new Taiwan headquarters in the area as the chipmaker expands on the island.
Nvidia’s growth and its increasing relationship with Taiwan’s semiconductor supply chain are also reshaping the broader economy, even as questions about sustainability are multiplying. Nvidia CEO Jensen Huang has called Taiwan “the center of the world’s computer ecosystem,” and the company’s expansion has come alongside a tariff shift after Nvidia recently sealed a trade deal with U.S. President Donald Trump that cut U.S. tariffs on Taiwan to 15% from 20%.
Economists and business leaders describe Taiwan’s moment as both opportunity and exposure. Wu Tsong-min, an emeritus economics professor at National Taiwan University and a former board member of Taiwan’s central bank, said, “We have been lucky,” while also warning that Taiwan’s reliance on chipmakers and technology companies raises the prospect that the AI frenzy could turn out to be a bubble. Wu said, “What if the AI bubble is real, and what if its rapid growth pace slows, what’s next for Taiwan? That’s the question many have been asking.”
Taiwan’s export surge has been closely tied to AI hardware. The island, home to about 23 million people, depends heavily on exports, which jumped nearly 35% year-on-year in 2025, the AP reported, with shipments to the U.S. surging 78% as AI demand expanded. TSMC and Foxconn, which makes AI servers for Nvidia and supplies Apple, have been central to that demand; the story describes Taiwan’s shift over time from labor-intensive industries such as plastics and textiles to advanced manufacturing including semiconductor fabrication.
TSMC’s scale and financial performance underscore the depth of the tech concentration. The report says TSMC has become one of the world’s most valuable companies, with profit jumping 46% last year to $1.7 trillion Taiwan dollars, and that it produces more than 90% of the world’s most advanced chips. Foxconn, formally Hon Hai Precision Industry Co., has doubled its value since 2023, and the report says it now makes AI servers and partners with OpenAI to supply AI data center equipment.
The report also frames AI-related demand as a moving target rather than a settled certainty. C.C. Wei, TSMC’s chairman, said during an earnings call in January that the company has to invest about $52-$56 billion this year, and that missteps could be disastrous if investments were not aligned with real customer needs. Fitch Ratings analysts, in a recent report cited by the story, argued that AI demand should stay strong at least in the near term, but warned longer-term outcomes would depend on the evolution of AI, trade and investment policies, and how adaptable Taiwanese firms are.
Other industry players offered a more bullish view of demand. Spencer Shen, chairman of Asia Vital Components, which supplies liquid cooling systems for Nvidia, told The Associated Press in an interview that he saw no signs of a slowdown and said, “We do not believe this is a bubble.” Shen linked that view to demand coming from companies with “real products and massive cash flows,” adding, “I expect AI to trickle through to our everyday level and change the way that things will work fundamentally.”
Beyond market uncertainty, the report places geopolitical pressure at the center of Taiwan’s economic risk picture. Some in Taiwan view the island’s role in chipmaking—particularly because chips’ main material is silicon—as a potential “silicon shield” against attack by Beijing, which claims independently governed Taiwan as part of China. The story notes that Beijing has stepped up pressure, including military drills near the island, and says exercises in late December included live rounds landing closer than before, according to Taiwan officials.
Wu said that both global technology companies and Chinese industries would suffer from massive disruptions if the supply chain were interrupted, and he presented that as a factor that could deter attack. Chen Shin-horng, vice president of the semi-official Chung-Hua Institution for Economic Research, said companies are mapping contingency scenarios for how to respond if Beijing takes military action, warning that Taiwan needs to understand “the potential risk, potential damages to Taiwan.”
At the same time, the AI boom is not benefiting everyone evenly, according to the report. It says Taiwan’s wealth gap has roughly quadrupled over the past three decades, and that while tech workers earning high wages—especially chip engineers and managers—have benefited, growth in traditional industries such as plastics and machine toolmaking has lagged. The report also describes concerns that the gap could widen further as the AI frenzy continues.
Jean Lin, a 30-something manager of a takeaway bento outlet in a Taipei neighborhood where Foxconn has an office, said, “It can be tough to make a living,” adding that “Many of the younger generation still can’t afford to buy an apartment.” She said many young people still feel they do not have much money, even as Taiwan’s technology fortunes rise.
Sources from the cluster included The Associated Press reporting from Taipei by Chan Ho-him, along with multiple downstream republished versions of the same reporting. Associated Press video journalist Johnson Lai contributed.