Taiwan's AI-fueled boom propels stock market and trade, but risks linger

Taiwan’s recent economic acceleration, powered by a global AI chip boom, pushed its stock market into the fifth-largest position worldwide and spurred GDP growth of nearly 13 percent in early 2025 and over 12 percent in the second quarter of 2026. U.S. imports from the island rose to $201 billion, overtaking China as the third-largest source of American goods. Analysts attribute the surge to Taiwan’s near-monopoly on advanced chips, while noting that a small share of the population works in high-tech and that an aging demographic may limit future expansion.

Trade-surplus concerns could provoke renegotiation of the Taiwan-U.S. deal, and Beijing’s diplomatic pressure adds further uncertainty. The combination of these factors creates a mixed outlook for the island’s long-term prosperity.