AI Boom Powers Taiwan’s Economy to Nearly 13% Growth in Second Quarter

TAIPEI, Aug 3: Taiwan’s economy expanded faster than expected in the second quarter of 2026, boosted by strong global demand for artificial intelligence (AI) technology and semiconductor products.

Gross domestic product (GDP) grew 12.9 percent year-on-year from April to June, following a 14.6 percent expansion in the first quarter, according to data released by Taipei’s statistics bureau. The result exceeded analysts’ median forecast of 10.5 percent, Bloomberg News reported.

Taiwan’s exports jumped 21.6 percent in the second quarter compared with the same period last year, driven mainly by sustained external demand for AI technologies and related applications, the statistics bureau said.

Imports also increased by 18.3 percent during the period, reflecting strong business activity and investment.

Although growth slowed slightly from the first quarter, economists said the performance remained exceptionally strong. Gareth Leather, senior Asia economist at Capital Economics, said continued investment plans by Taiwan’s major semiconductor companies are expected to support further growth.

Taiwan, a global hub for semiconductor manufacturing, plays a central role in the AI supply chain. The island is home to major technology companies including TSMC, which produces advanced chips designed by companies such as NVIDIA, and Foxconn, which assembles data center equipment.

Meanwhile, Hong Kong’s economy expanded at a slower pace, growing 4.3 percent in the second quarter, according to official data.

The growth was supported by strong exports linked to the global AI boom and resilient domestic demand, but fell short of economists’ expectations of 4.9 percent and slowed from 5.9 percent growth in the first quarter.

Hong Kong’s exports of goods surged 28.8 percent year-on-year in the second quarter, while imports increased 29.3 percent. Private consumption rose 2.9 percent, although seasonally adjusted GDP declined 0.6 percent compared with the previous quarter.

Authorities said Hong Kong continues to face external challenges, including geopolitical tensions in the Middle East, uncertainty over US monetary policy and rising trade protectionism.

Despite these risks, officials said strong global demand for AI-related products is expected to support exports in the second half of the year.

Market analysts warned that inflation risks remain due to disruptions in global trade, investment and supply chains, with factors including geopolitical tensions, protectionism and increased spending on AI infrastructure potentially adding further pressure on prices.