Taiwan’s economy is thriving thanks to AI. Not everyone sees its advantages | Business and Financial Issues

Taipei, Taiwan – For Li, an engineer at Taiwanese computer giant ASUS, the AI ​​movement sweeping Taiwan has made it an exciting time to work in tech.

Taiwan is a semiconductor powerhouse, producing about 90 percent of the high-end chips used to power AI models such as ChatGPT and Claude.

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“I have heard that Taiwan’s technology and computer industries are becoming stronger,” Li, who asked not to be identified by his real name, told Al Jazeera, referring to events such as the upcoming Computex tech and AI expo from June 2 to 6.

However, Li worries that the spoils of Taiwan’s AI windfall are not being shared equally.

“A lot of non-tech industries don’t seem to be feeling the benefits, so it’s not evenly distributed at the moment,” Li said, explaining that many of his classmates who work outside of tech don’t seem to be doing the same.

“The industries that are at the forefront of technology are the ones that are benefiting.”

Taiwan’s economy is growing at a pace that would be the envy of any country.

The Gross Domestic Product (GDP) rose 8.63 percent in 2025, followed by a significant increase of 13.69 percent in the first three months of this year.

Exports rose 34.9 per cent last year to $640.7bn, with more than two-thirds of all goods related to technology and services.

Semiconductors alone account for more than 20 percent of Taiwan’s GDP, according to US trade, and most of the production is controlled by the Taiwan Semiconductor Manufacturing Company (TSMC), whose top customers include Nvidia and Apple.

TSMC alone accounts for more than 40 percent of the island’s market value.

While impressive, the rapid rise of the economy has raised concerns about the growing reliance on AI.

Taiwan’s Central Bank Governor Yang Chin-lung has warned of a “K-shaped economy,” with some sectors growing rapidly while others are falling.

Although it is a big hit to Taiwan’s economy, the semiconductor industry is far from a major source of employment.

The sector employs only about 300,000 of the 11 million people, according to Dachrahn Wu, director of the National Central University’s Research Center for Taiwan Economic Development.

The electronics and IT industries employ about one million people, compared to about seven million who work in the service sector, according to Wu’s data.

The heavy reliance on single companies for growth marks a shift from the Asian Tiger era of the 1960s to the 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 works on Taiwan’s post-war economic transformation.

“From the 1970s to the 1990s, economic growth was concentrated in the hands of small and medium-sized enterprises that modeled the ‘living room factory’, while family-owned businesses focused on producing one piece of consumer goods,” Lin told Al Jazeera.

“The benefits of this period were widely spread throughout Taiwan,” Lin said.

“In contrast, today, economic inequality is widening in Taiwan because real estate is becoming more expensive and large corporations like TSMC attract a larger share of foreign investment than smaller corporations.”

Alicia Garcia Herrero, Asia Pacific economist at French bank Natixis, said Taiwan’s economic model risks becoming a “dual society” as technology sweeps away talent, money and resources and destroys other industries.

“It’s very difficult if you’re not in the (semiconductor) group in Taiwan right now,” Garcia Herrero told Al Jazeera, pointing to low wages for non-technical workers and high business costs.

Some of Taiwan’s problems are out of control, said Chao-Hsi Huang, a fellow at the Taipei School of Economics and a former executive at Taiwan’s central bank.

These challenges include US President Donald Trump’s tariffs, which have partially exempted semiconductors but affect exporters in non-tech industries.

“The former (manufacturing) sector has more investment than other competing countries such as Korea or Japan, or Southeast Asian countries, because we cannot sign free trade agreements,” Huang told Al Jazeera.

“We’re treated differently, and that’s what we’re dealing with.”

Critics have placed other issues on the government’s shoulders, including a weak currency that has made exports more competitive but has been eroded by consumers’ purchasing power.

Taiwan’s government refuses to take action on the currency, although it agrees to intervene in the market to address “volatility” when the new Taiwan dollar falls or rises sharply against other currencies.

After a two-decade hiatus in the 2010s, wages are growing again – albeit unevenly.

Real wages increased by 1.4 percent in 2025, while average wages increased by 1.35 percent, according to the Directorate-General of Budget, Accounting and Statistics (DGBAS).

However, 70 percent of Taiwanese earn less than the median, a figure that is largely due to the disparity in high wages in the tech industry, where salaries are almost twice as high as the average.

For Taiwanese frustrated by unstable wages, Taiwan’s booming market has offered some solace.

Riding the AI ​​boom, the Taiwan Stock Exchange (TWSE) is expected to double in value between 2019 and 2025 to $2.2 trillion, according to HSBC.

Regulatory changes introduced in 2020 made it easier for small investors to buy individual stocks, fueling the daily rush of Taiwanese people to 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 of their inclusive development and growth”.

Although more equal than neighbors such as Singapore, Hong Kong and China, Taiwan’s economic divide has grown over the years.

In 1980, Taiwan had a Gini coefficient of 0.308 – a measure of wealth distribution where 0 indicates perfect equality – putting it on par with modern Norway, according to DGBAS.

By 2024, Taiwan’s Gini score was 0.341 – lower than most countries but a significant increase.

“I see that the benefits of economic growth are not distributed equally,” Ryan, an engineer in the civil engineering sector who asked not to be identified by his real name, told Al Jazeera.

“Some factories or property owners benefit a lot, but office workers often face inflation and housing, not an easy life,” he said.

Wei-ting Yen, an assistant researcher at the research institute Academia Sinica, said that while the boom in semiconductors and stock markets has helped Taiwanese people, it has fueled the anger of others.

In a survey of 1,195 Taiwanese voters conducted last month, 40 percent said their families were “worried” or “very concerned” about their finances due to rising costs, especially housing.

“I think seriously, they are worried that they are not accumulating wealth and it is not enough to help them buy a house or a house,” Yen told Al Jazeera.

“House prices have been going crazy all over the world, and the stock market has been going crazy, (but) for people who don’t have the extra cash to use those two methods, it creates frustration and anxiety around them,” he said.