A global investment boom in artificial intelligence (AI) is driving Taiwan's economy to unprecedented heights. Centered around TSMC, the world's largest semiconductor foundry, the stock market, exports, and economic growth rates are all rising, positioning Taiwan as a major beneficiary of the global AI surge. However, concerns are growing that the benefits of this semiconductor-driven growth are not spreading across the economy, leading to increased polarization between industries and social classes.
On May 26, thanks to TSMC's soaring stock prices, Taiwan's stock market surpassed India to become the fifth largest in the world, following the United States, mainland China, Japan, and Hong Kong. TSMC accounts for over 40% of Taiwan's total market capitalization, with more than 70% of listed companies being semiconductor-related. The Taiwanese stock market has risen nearly 50% this year alone.
Economic indicators are also impressive. Taiwan's GDP growth rate for the first quarter of this year reached 13.69% compared to the same period last year, and its per capita GDP has surpassed that of South Korea. The Taiwanese statistical authority raised its GDP growth forecast from 7.71% to 9.64%, an increase of 1.93 percentage points. The per capita GDP estimate was also adjusted upward from $44,000 to $45,610 (approximately 71.13 million won), with exports expected to reach about $900 billion, marking a 39.77% annual growth rate and the highest level in 50 years.
However, behind these impressive figures lies a serious imbalance stemming from an over-reliance on the semiconductor industry. According to a report by Hong Kong's Asia Weekly, the average wage increase for employees of over 1,800 companies listed on the Taiwanese stock market last year was only 5.64%, significantly below the GDP growth rate of 8.63%. Only the semiconductor, electronic components, and automotive parts sectors exceeded the average, while other traditional industries experienced stagnation or decline.
In reality, Taiwan's stock market is driven primarily by a few large AI and semiconductor companies. This is why the Taiwan Stock Exchange is often referred to as the 'TSMC Index.' The overall market tends to rise and fall with TSMC's stock price. While the recent surge in TSMC's stock has created an appearance of a bullish market, many small and mid-sized companies, as well as traditional industries, have struggled for years.
Concerns are emerging in Taiwan that the economy may be falling into a state of 'Dutch disease.' This phenomenon occurs when rapid growth in a specific industry undermines the competitiveness of other sectors, hindering long-term balanced economic development.
The AI semiconductor boom is creating a typical 'K-shaped growth' structure in Taiwan's economy, where the semiconductor industry and asset markets are expanding rapidly, while traditional industries and the lower-income economy are relatively stagnant.
Wealth inequality is also widening quickly. According to a survey by Taiwan's National Statistics Office, the asset gap between the top 20% of households and the bottom 20% has increased from 16.8 times 30 years ago to 66.9 times today, indicating that wealth accumulation is rapidly concentrating among a small elite.
As of the end of March this year, the Financial Supervisory Commission reported that the number of high-net-worth individuals with net assets exceeding NT$100 million (approximately $4.8 million) surpassed 20,000, a more than 70% increase from the previous year. Their total assets approached NT$2.4 trillion, reaching an all-time high.
In contrast, the economic outlook for ordinary citizens is deteriorating. Economic uncertainty, skyrocketing housing prices, and tensions across the Taiwan Strait are causing more workers to tighten their belts. A recent trend in Taiwan has given rise to the term 'Beggar Superman,' which satirizes the behavior of consumers who only seek out discounted products nearing their expiration dates at convenience stores.
* This article has been translated by AI.
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