Taiwan’s economy is undergoing a transformation, driven by the booming semiconductor industry and the rise of artificial intelligence (AI). In Tainan, a new semiconductor cluster is emerging, with TSMC, the world’s largest semiconductor foundry, leading the charge. The company completed two factories in Tainan in 2020 and began constructing a state-of-the-art 2-nanometer semiconductor plant in nearby Kaohsiung in 2022. These developments have already created 9,000 jobs, with another 9,000 expected once the new facility is operational. As employees and partner companies move into the area, demand for housing has surged, leading to a rise in real estate prices. In Kaohsiung, housing prices jumped 13% in the second quarter of this year compared to the same period last year.
The semiconductor and AI boom is reshaping Taiwan’s economy. UBS Group AG projects a 47% increase in the number of Taiwanese individuals with assets exceeding $1 million by 2028, the highest growth rate among 56 countries surveyed. UBS predicts that the thriving global semiconductor and AI industries will create new wealth in Taiwan, attracting millionaires from abroad and driving further economic development.
Taiwan’s economic growth, which hovered around 2-3% in the early 2010s, skyrocketed to 6.6% in 2021, largely due to the surge in semiconductor demand during the COVID-19 pandemic. This boom in the IT sector, including TSMC, has led to higher corporate wages, increased personal wealth, and stronger consumer spending, invigorating the economy. The Financial Times has described this as the “wealth spread brought by AI and semiconductors,” noting that rising wages have spurred investments, asset accumulation, and overall economic growth.
The International Monetary Fund (IMF) reports that Taiwan’s per capita GDP has been rising annually and is expected to reach $34,430 this year, surpassing South Korea’s $34,160. South Korea had overtaken Taiwan in per capita GDP in 2003, but since 2020, as Taiwan has gained dominance in the semiconductor and AI supply chains, it regained the lead in 2022.
Taiwanese media have highlighted the impact of the semiconductor boom, particularly since 2021. During the pandemic, demand for IT products soared, boosting TSMC’s sales and benefiting Taiwanese data center server manufacturers. As U.S. sanctions against China intensified, the semiconductor supply chain began to shift toward Taiwan. While China’s share of the U.S. semiconductor import market dropped to about one-third, Taiwan’s share increased by nearly 10%. The generative AI boom at the end of 2022 further fueled demand for Taiwan’s server and computing-related companies. According to Bloomberg, a luxury shopping mall has opened in Hsinchu, home to TSMC’s headquarters, where on weekends, crowds flock to Tesla and BMW showrooms, as well as apartment and single-family home sales offices. Over the past four years, Ferrari sales in Taiwan have doubled.
The wealth generated by the semiconductor industry is also revitalizing other sectors that have long been stagnant. As tech industry workers invest their rising salaries in real estate, the property market has seen significant growth, and wages in the service sector, which had been flat for years, are climbing rapidly. According to local job placement agency 104 Job Bank, wages in the hotel and restaurant industry have risen by 5.5% this year, marking the largest increase in a decade.
