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The wealth generated by the Taiwanese semiconductor industry has been revitalizing the island’s economy as a whole, leading to Taiwan’s National Development Council (NDC) recently unveiling its estimation that Taiwan would overtake Japan in terms of GDP per capita this year, South Korea next year and catch up with Israel at some point in the future. Specifically, the NDC predicts an increase in GDP per capita from US$39,105 in 2025 to US$42,787 in 2028 on the back of GDP growth of between 2.8 percent and 3.6 percent.
The International Monetary Fund (IMF) is even more optimistic, expecting the island’s per capita GDP to reach US$34,430 this year, surpassing Japan’s US$33,100 and South Korea’s US$34,160, eclipsing China as a whole with 2023 GDP at the equivalent of only US$12,614. UBS Group projected a 47 percent increase in the number of Taiwanese individuals with assets exceeding US$1 million by 2028, representing the highest growth rate among 56 countries surveyed.
The NDC attributes the strong momentum to a rush by US tech giants to develop artificial intelligence (AI) services and applications benefitting Taiwan being the home to the world’s major suppliers of AI chips and servers. US chipmaker Nvidia is developing an AI R&D center in Taipei that will employ 1,000 engineers. US chipmaker AMD will build a US$263.4 million AI and silicon photonics R&D facility on the island. Amazon will invest billions of dollars in Taiwan over the next 15 years to build data centers. TSMC, the world’s largest semiconductor foundry, for its part, is constructing a state-of-the-art 2-nanometer semiconductor plant in Kaohsiung, already creating 9,000 jobs, with another 9,000 expected once the new facility is operational. As tech industry workers invest their rising salaries in real estate, the property market is enjoying stiff tailwinds.
Meanwhile, Japanese GDP per capita has been falling since 2021, meaning the looming surpassing of Japan’s GDP per capita represents a mixture of positive factors for Taiwan and negative factors for Japan. In 2023, for the first time in 55 years, Germany overtook Japan in GDP, due in part to the weak yen, pushing Japan back one place to make it the world’s fourth-largest economy.
“Benefiting from the supply chain shift caused by the previous US-China trade war, the epidemic accelerating digital transformation, and the continued expansion of demand for high-performance computing, artificial intelligence, and cloud industries, Taiwan's economic growth performance in recent years has been significantly better than that of Korea and Japan,” Gordon Sun, Director of the Taiwan Institute of Economic Research (TIER) Macroeconomic Forecasting Center, told Asia Sentinel.
