Al Jazeera
For Li, an engineer at Taiwanese computer giant ASUS, the current AI surge has revitalized the technology sector, making this an exhilarating time to work in the industry.
As a prominent semiconductor producer, Taiwan manufactures approximately 90 percent of the most advanced chips that power leading AI models such as ChatGPT and Claude.
“I've noticed a greater vibrancy in Taiwan’s tech and computer industry,” Li, who requested anonymity, informed Al Jazeera, highlighting events like the upcoming Computex tech and AI expo set for June 2 to 6.
Nevertheless, Li expresses concern regarding the unequal distribution of the benefits stemming from Taiwan’s AI success.
“Most sectors not directly tied to technology seem to be missing out, so the benefits don’t appear to be evenly shared at the moment,” Li shared, noting that many of his peers employed outside the tech sector do not seem to be faring as well.
“It is primarily the sectors at the forefront of this technological wave that are reaping the rewards.”
Taiwan's Explosive Growth
Taiwan's economy is experiencing a remarkable pace of growth that other nations would envy. In 2025, the gross domestic product (GDP) increased by 8.63 percent, followed by an extraordinary expansion of 13.69 percent in the first quarter of this year.
Last year, exports surged by 34.9 percent, reaching $640.7 billion, with tech-related goods and services constituting more than two-thirds of this total.
Semiconductors alone contribute over 20 percent to Taiwan's GDP, according to U.S. trade data, with the majority of this production being managed by Taiwan Semiconductor Manufacturing Company (TSMC), which counts Nvidia and Apple among its top customers.
Notably, TSMC represents over 40 percent of the total value of the island's stock market.
Despite these impressive figures, concerns have arisen regarding overdependence on AI-driven growth.
Taiwan's Central Bank Governor, Yang Chin-lung, has warned about the emergence of a "K-shaped economy,” in which certain sectors experience rapid growth while others stagnate.
The Employment Gap
While the semiconductor industry is vital to the Taiwanese economy, it is not the largest employment sector. The industry employs approximately 300,000 individuals 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.
In contrast, the broader electronics and IT manufacturing sector employs around one million people, while approximately seven million are engaged in the service sector, as indicated by Wu’s findings.
A Shift from the Past
The current heavy reliance on a singular industry for economic growth marks a significant change from the Asian Tiger era spanning the 1960s to the 1990s, when Taiwan's economy thrived thanks to numerous small and medium-sized enterprises (SMEs), as explained by historian James Lin, who specializes in Taiwan's post-war economic evolution.
“From the 1970s to the 1990s, economic growth was primarily driven by small and medium family enterprises that exemplified the ‘living room factory’ model, focusing on the production of specific components for consumer products,” Lin noted in an interview with Al Jazeera.
“As a result, the benefits during that era were more widely distributed across Taiwanese society,” Lin added.
“In contrast, today, the growing wealth gap is driven by soaring land prices and large corporations like TSMC, which attract the bulk of foreign capital investment, sidelining smaller firms.”
Alicia Garcia Herrero, chief economist for Asia Pacific at French investment bank Natixis, warned that Taiwan's current economic model risks developing a “dual society,” in which the tech sector monopolizes talent, funding, and resources at the expense of other industries.
"It's incredibly challenging if you are not a part of the [semiconductor] sector in Taiwan right now,” Garcia Herrero confided to Al Jazeera, citing stagnant wages in non-tech roles and increasing costs for businesses.
External and Policy Challenges
Certain challenges Taiwan faces are beyond its control, stated Chao-Hsi Huang, associate dean at the Taipei School of Economics and a former director at Taiwan's central bank.
These challenges encompass repercussions from U.S. tariffs under former President Donald Trump, which, while partially exempting semiconductors, have adversely affected exporters in non-tech industries.
“The traditional [manufacturing] sector encounters higher tariffs compared to competing countries like Korea or Japan, or even nations in Southeast Asia, as we have not been able to conclude free trade agreements,” Huang remarked to Al Jazeera.
“We are treated differently in this regard, which poses a significant challenge for us.”
Critics have also attributed other issues to the government, including a weak currency that, while enhancing export competitiveness, diminishes consumers' purchasing power.
Taiwan's administration denies any involvement in currency manipulation, though it does concede to intervening in the market to address "volatility" when the new Taiwan dollar fluctuates significantly against other currencies.
Wage Growth Remains Uneven
Following two decades of stagnation during the 2010s, wages are on the rise once more, yet the growth is unequal.
According to the Directorate-General of Budget, Accounting and Statistics (DGBAS), real average wages increased by 1.4 percent in 2025, while median wages rose by 1.35 percent.
Despite these gains, 70 percent of Taiwans’ populace earns less than the average, a situation exacerbated by the influence of significantly higher wages in the tech sector, where compensation approaches nearly double the national average.
For many in Taiwan grappling with the challenge of stagnant wages, the soaring stock market has provided a degree of solace.
During the AI boom, the Taiwan Stock Exchange (TWSE) witnessed its value more than double from 2019 to 2025, reaching $2.2 trillion, as reported by HSBC.
Regulatory adjustments made in 2020 have facilitated small-scale investors’ ability to purchase individual stocks, resulting in a notable influx of everyday Taiwanese into the market.
In January, the TWSE announced that the number of trading accounts had climbed to 13.77 million, which correlates with 60 percent of Taiwan's population, praising the exchange as a "cornerstone for inclusive prosperity and shared growth."
Growing Wealth Inequality
Despite being more equitable than neighbors such as Singapore, Hong Kong, and China, Taiwan's wealth disparity has widened significantly over recent decades.
In 1980, Taiwan recorded a Gini coefficient of 0.308—a measure of wealth distribution where 0 represents perfect equality—comparable to contemporary Norway, according to DGBAS data.
By 2024, Taiwan's Gini coefficient had risen to 0.341, which, while lower than in many other countries, still signals a substantial increase.
“I feel that the benefits of economic growth have not been distributed fairly,” Ryan, an engineer in the local tech sector who also requested anonymity, shared with Al Jazeera.
“Certain industries or asset holders benefit substantially, but ordinary office workers often struggle with rising prices and housing costs instead of enjoying an improved quality of life,” he explained.
Wei-ting Yen, an assistant research fellow at Academia Sinica, observed that while the semiconductor and stock market booms have elevated the fortunes of some Taiwanese, they have also intensified the anxieties of others.
In a survey conducted last month among 1,195 Taiwanese voters, 40 percent indicated that their households were financially either “anxious” or “very anxious” due to increasing living costs, particularly housing expenses.
"I believe there is a widespread concern about not accumulating wealth, which hinders their ability to purchase a house or an apartment," Yen noted to Al Jazeera.
"Housing prices are escalating globally, along with the stock market, [but] for individuals who lack surplus funds to invest in these two avenues, it creates heightened frustration and anxiety surrounding their financial wellbeing," she concluded.
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