Taiwan GDP Surges 12.92% in Q2 on AI Chip Exports
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- Taiwan's GDP grew 12.92% in Q2 2025, following a 13.69% rise in Q1, with full-year 2025 growth at 8.63% — driven largely by surging US demand for AI chips.
- The US imported $201bn from Taiwan in 2025, nearly double the $116bn from 2024, and in May Taiwan overtook China to become the third-largest source of US imports behind Mexico and Canada.
- Taiwan produces roughly 90% of advanced chips powering leading AI models, with TSMC alone accounting for 40% of Taiwan's stock market and 4% of its GDP growth.
- Trump's administration secured a deal under which Taiwan will invest $500bn in the US — half direct investment, half credit guarantees — while Taiwanese firms can import 2.5× their US factory capacity tariff-free and Taiwan cuts tariffs on 99% of US exports.
- Taiwan's trade surplus with the US is approaching $200bn, a figure experts warn could provoke Trump to renegotiate, given his stated goal of eliminating trade deficits with allies.
- Taiwan's chip industry employs at most 350,000 people while roughly a fifth of its population is over 65, raising fears of a K-shaped economy where most workers remain outside the AI boom.
- China's government claims Taiwan's deepening US tech ties will 'drain Taiwan's economic interests' and 'hollow out' its major industry, framing the boom as strategically fragile.
Why it matters: Taiwan's boom is dangerously concentrated: TSMC alone drives 40% of its stock market and 4% of GDP growth, while the chip sector employs at most 350,000 people and a fifth of the population is over 65. That narrow base — paired with a roughly $200bn US trade surplus — gives Trump the leverage experts say he will soon pull to renegotiate.
