Taiwans

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

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

“I’ve felt Taiwan’s tech and computer industry becoming more vibrant,” Li, who asked not to be identified by his real name, told Al Jazeera, pointing to events such as the upcoming Computex tech and AI expo running from June 2 to 6.

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

“Most industries unrelated to tech don’t seem to be feeling the benefits, so it doesn’t feel evenly distributed at the moment,” Li said, explaining that many of his former classmates working outside of tech do not appear to be doing as well.

“It’s mainly the industries at the front of this tech wave that are benefitting.”

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

Gross domestic product (GDP) rose 8.63 percent in 2025, followed by a heady 13.69 percent expansion in the first three months of this year.

Exports surged 34.9 percent last year to $640.7bn, with more than two-thirds of the total being tech-related goods and services.

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

TSMC by itself accounts for more than 40 percent of the value of the island’s stock market.

While impressive, the rapid economic expansion has raised concerns about being overreliant on the growth of AI.

Taiwan’s Central Bank Governor Yang Chin-lung has sounded the alarm about an emerging “K-shaped economy,” where certain sectors grow rapidly while others fall into stagnation.

While critical to Taiwan’s economy, the semiconductor industry is far from the largest source of jobs.

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

The broader electronics and IT manufacturing industry employs about one million people, compared with about seven million working in the service sector, according to Wu’s data.

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

“From the 1970s to 1990s, economic growth was concentrated in the hands of small and medium family enterprises that exemplified the ‘living room factory’ model, where family-owned businesses focused on producing one part for a consumer product,” Lin told Al Jazeera.  

“The benefits of this period were thus more widely distributed across Taiwanese society,” Lin said.

“By contrast, today, wealth inequality is growing in Taiwan as land is becoming more expensive and large corporations like TSMC attract the lion’s share of foreign capital investment rather than small corporations.”

Alicia Garcia Herrero, chief economist for Asia Pacific at French investment bank Natixis, said Taiwan’s economic model has left it at risk of becoming a “dual society” where tech sweeps up talent, funding and resources at the expense of other industries.

“It’s very hard if you’re not in [the semiconductor] sector in Taiwan right now,” Garcia Herrero told Al Jazeera, pointing to low wages for workers in non-tech roles and rising costs for businesses.

Some of Taiwan’s challenges are out of its control, said Chao-Hsi Huang, associate dean at the Taipei School of Economics and a former director at Taiwan’s central bank.

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

“The traditional [manufacturing] sector suffers higher tariffs than other competing countries like Korea or Japan, or even Southeast Asian countries, due to the fact we are not able to sign free trade agreements,” Huang told Al Jazeera.

“We are treated differently, and that’s a difficulty we are facing.”

Critics have placed other issues on the shoulders of the government, including a weak currency that has made exports more competitive but chipped away at consumers’ purchasing power.

Taiwan’s government denies engaging in currency manipulation, though it acknowledges intervening in the market to smooth out “volatility” when the new Taiwan dollar falls or rises sharply against other currencies.

After two decades of stagnation through the 2010s, wages are growing again – albeit unevenly.

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

Still, 70 percent of Taiwanese earned less than the average, a statistic attributable to the distorting effect of much higher salaries in the tech sector, where pay is nearly double the national average.

For Taiwanese frustrated with stagnant pay, Taiwan’s soaring stock market has offered some consolation.

Riding the AI boom, the Taiwan Stock Exchange (TWSE) more than doubled in value between 2019 and 2025 to $2.2 trillion, according to HSBC.

Regulatory changes introduced in 2020 made it easier for small-time investors to buy single stocks, encouraging a rush of everyday Taiwanese into 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 for inclusive prosperity and shared growth”.

Though more equal than neighbours such as Singapore, Hong Kong and China, Taiwan’s wealth divide has grown over the decades.

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

By 2024, Taiwan’s Gini coefficient had grown to 0.341 – lower than many countries but still a significant rise.

“I feel that the benefits of economic growth haven’t been distributed evenly,” Ryan, an engineer in the local tech sector who asked not to be identified by his real name, told Al Jazeera.

“Some industries or asset holders benefit significantly, but ordinary office workers often experience a rise in prices and housing costs, rather than an easier life,” he said.

Wei-ting Yen, an assistant research fellow at the research institution Academia Sinica, said while the semiconductor and stock market booms have helped some Taiwanese, they have heightened the angst of others.

In a survey of 1,195 Taiwanese voters carried out last month, 40 percent said their household was financially either “anxious” or “very anxious” due to rising living costs, particularly housing.

“I think subjectively, they’re anxious that they’re not accumulating wealth and it’s not enough to help them buy a house or an apartment,” Yen told Al Jazeera.

“Housing prices have been going crazy worldwide, and the stock market has been going crazy, [but] for people who do not have extra money to invest in those two options, it creates even more frustration and anxiety around them,” she said.

May 21 (UPI) — President Donald Trump has said he will speak with Taiwanese President Lai Ching-te about a stalled $14 billion arms deal, a call that would be precedent-setting for a sitting U.S. president and likely anger China.

“I’ll speak to him,” Trump said Thursday from the tarmac of Joint Base Andrews in Maryland.

The president was responding to a reporter’s question on whether he planned to call Lai before making a final decision on the Congress-cleared weapons deal, the future of which remains uncertain following Trump’s visit last week to Beijing for meetings with Chinese leader Xi Jinping.

Taiwan has requested the weapons package as it faces an aggressive China, which claims sovereignty over the self-governing island it views as a breakaway province and has said it will take it back by force if necessary.

The weapons deal was pre-approved by Congress in January 2025, and Taiwan’s legislative body earlier this month approved a special defense budget of $25 billion to buy weapons from the United States. The package now requires Trump to sign off on it.

But Trump on Friday told reporters aboard Air Force One while en route back to the United States following his visit with Xi in Beijing that they had “talked a lot about Taiwan” and that he would “make a determination over the next fairly short period” on whether to give the arms deal final approval.

Taiwan was a significant topic during the trip, with Xi warning Trump that the island was “the most important issue” in bilateral ties and that, if mishandled, could trigger “clashes and even conflicts.”

Amid the uncertainty, Lai issued a Facebook post Sunday night stating Taiwan-U.S. security cooperation and arms sales “are key elements in maintaining regional peace and stability” and that the island’s security is the region’s security.

Trump did not say Wednesday when he would speak with Lai or discuss specifics concerning the arms deal.

“We have that situation very well in hand,” he said, adding that he had an “amazing” meeting with Xi.

“We’ll work on that,” he said.

Trump spoke with Taiwan’s then-President Tsai Ing-wen in 2016, when he was the president-elect, but no sitting U.S. president is known to have spoken with the leader of Taiwan since Jan. 1, 1979, when the Carter administration formally severed diplomatic ties with the Republic of China, the official name of Taiwan’s government, and established relations with the People’s Republic of China in Beijing.

Spokeswoman Zhu Fenglian of Beijing’s State Council Taiwan Affairs Office gave reporters a standard answer during a press conference Wednesday, stating: “We firmly oppose the United States conducting any form of official exchanges with China’s Taiwan region, and we firmly oppose the United States selling weapons to China’s Taiwan region.”

“This position is consistent and clear,” she said.

UPI has contacted Taiwan’s Foreign Ministry for comment.

Democrats and some Republicans have urged Trump to approve the arms deal and expressed concern over its future as the president was in Beijing.

“Trump must not sell out Taiwan, period,” Senate Minority Leader Chuck Schumer, D-N.Y., said in a social media statement.

The Republic of China, the current government of Taiwan, once governed mainland China but retreated to the island following its defeat by the Chinese Communist Party in the Chinese Civil War in 1949.

The Chinese Communist Party views Taiwan as part of China under its One China principle and seeks reunification with the island — an act Taiwan says would amount to an illegal annexation.

President Lai says Taiwan’s future is up to its people as the island faces Chinese and US headwinds.

Taiwanese President William Lai Ching-te said the future of Taiwan should not be decided by “foreign forces” but is instead in the hands of its 23 million citizens.

Speaking on the second anniversary of his inauguration on Wednesday, Lai said his goal as president continued to be maintaining peace and stability across the Taiwan Strait – the 180km (112-mile) waterway dividing Taiwan from China – and to prevent “external forces” from altering the island’s political status quo.

The president said he was still willing to engage with Beijing, which cut off communication with Taipei in 2016, but only through “orderly exchanges” based on the principles of “equality and dignity”.

Taiwan is a responsible member of the international community, not a “party that undermines stability”, he also said, in an apparent swipe at Beijing.

China’s Taiwan Affairs Office on Wednesday accused Lai of inciting “cross-strait confrontation” by supporting “Taiwan independence” in remarks coinciding with his anniversary.

The office’s spokesperson, Zhu Fenglian, said Lai “peddles separatist fallacies” while using a narrative of “democracy versus authoritarianism” to describe the Taiwan-China relationship.

Zhu also accused Lai of ignoring the wellbeing of the Taiwanese public to pander to “external forces attempting to ‘seek independence through foreign aid’ and ‘seek independence through force’.”

Lai has faced a tumultuous 24 months as president, with pressures from both inside and outside Taiwan, including from traditional ally the United States.

The opposition-controlled legislature cut down a signature special defence budget from $40bn to $25bn, and this week tried and failed to impeach him over a tax revenue dispute.

He has a 38 percent approval rating, according to a poll conducted earlier this month by news network TVBS, which, while low, is still better than his 32 percent approval rating during his first year in office.

His disapproval rating has also fallen from 55 percent to 44 percent.

Lai said on Wednesday that his government would take other measures to make up the shortfall in Taiwan’s defence spending.

As president, Lai has also had to contend with uncertainty from the US, Taiwan’s longstanding unofficial ally, amid growing pressure from China, which has staged five rounds of military exercises around Taiwan since his May 2024 inauguration.

US President Donald Trump said last week that US arms sales to Taiwan could be used as a “very good negotiating chip” with Beijing.

Trump’s remarks followed a meeting with Chinese President Xi Jinping in Beijing, where the Chinese leader called on Trump to take a stronger stance on Taiwan’s political status.

The US has for decades maintained a deliberately ambiguous stance on the issue.

Lai was also forced to delay a state visit to Eswatini, formerly known as Swaziland, Taiwan’s only diplomatic ally in Africa, in April when several countries denied him access to their airspace due to alleged Chinese pressure. He later made the trip through a circuitous route on board Eswatini King Mswati III’s private jet.