Why did Taiwan's economy grow by 13.69% in the first quarter? Korea at 3.6%, the U.S. at 2.7%—the impact of AI-driven demand varies significantly.

The surge in AI hardware demand has driven an extraordinary boom in semiconductor exports from both Korea and Taiwan, giving rise to what some call a "super AI cycle."

Taiwan’s economic growth is export-driven. In the first quarter, electronic product exports rose by 73.7% year-on-year, while information and communications products surged 120.9%. Export growth contributed 9.62 percentage points to GDP, corresponding to a $30.8 billion increase in GDP—accounting for 70% of the actual Q1 GDP increment of $43.8 billion. This seems exaggerated, but it's largely due to Taiwan’s relatively small economic scale: hundreds of billions in new orders can generate extremely high growth rates. U.S. tech giants are set to spend over $1 trillion annually on data center capital expenditures; a single quarter’s incremental spending translating into hundreds of billions for Taiwan is not implausible.

A similar case is Guyana, where oil exports have fueled economic growth of 30–60% for three consecutive years. In 2022, its GDP grew by 62.3%, as the oil economy took off—oil and gas exports accounted for over 90% of total exports. Growth remained strong at 33.8% in 2023 and 43.4% in 2024, only moderating in 2025 to 15%.

The similarity between Taiwan and Guyana lies in how a global “super pulse” (oil or AI) hitting a small, open economy can generate growth miracles far exceeding global averages. However, more than 70% of the growth is concentrated in a single export sector, while domestic demand remains weak in comparison.

In Guyana, the government receives only 16.5% of each barrel’s revenue (2% royalty fee, 14.5% profit share), while the ExxonMobil-led consortium captures 83.5%. The consortium includes Husky, CNOOC, and others. While the Guyanese government has accumulated around $5 billion in sovereign wealth funds, this pales in comparison to the international consortium’s gains. Moreover, the consortium’s profits are counted toward Guyana’s GDP, pushing per capita GDP to $30,000—but living standards remain low. A similar phenomenon occurs in Ireland, where multinational corporations report their GDP figures there, inflating per capita GDP figures without substantially benefiting local residents.

Taiwan exhibits a comparable dynamic, though less extreme. Exports are dominated by domestic firms like TSMC and MediaTek, yet foreign ownership stands at roughly 70–80% for TSMC and 50–60% for MediaTek. Foreign holdings in Taiwan’s semiconductor industry are about 50% overall. Taiwan holds an advantage here: local firms possess technological capabilities and operational sovereignty, and their employees enjoy high incomes.

The exceptionally high foreign ownership is rare among major global tech economies. A similar situation exists in South Korea, where Samsung and SK Hynix dominate memory chip markets during periods of extreme market prosperity. Samsung has foreign ownership of about 48–52%, but foreign investors hold 80% of the preferred shares with dividend priority, meaning they capture a larger share of profits. SK Hynix has foreign ownership of approximately 53–56%. Ordinary South Koreans do not directly benefit from Samsung or SK Hynix’s performance unless they invest in stocks. About one-third of South Koreans trade stocks—even borrowing money to speculate aggressively, hoping to profit from the unprecedented bull market.

Korea’s actual GDP growth in the first quarter was 3.6%, significantly lower than Taiwan’s. This is because Korea’s economy is roughly twice the size of Taiwan’s, so the AI-driven boost has less relative impact. In the U.S., first-quarter GDP grew by 2.7% year-on-year—AI helped keep growth above a sluggish 1%, otherwise it would have been below 1%.

An important distinction is that Korea’s exports are not dominated solely by electronics like Taiwan’s; steel, automobiles, and petrochemicals also play substantial roles. Korea’s first-quarter exports hit a record $219.9 billion, with chip exports surging 139%. Overall export growth was 37.8%, similar to Taiwan’s, but trade surplus was much smaller due to strong imports of energy and raw materials from traditional heavy industries.

Thus, China, the U.S., and South Korea have more complex economic systems with diversified export baskets—no single sector can drive miraculous growth. Economic growth rates depend primarily on domestic demand. By contrast, Taiwan’s economy is becoming increasingly monolithic, resembling Guyana and Ireland in structure, which explains its exceptionally high growth numbers.

Original article: toutiao.com/article/1864421156555780/

Disclaimer: This article reflects the personal views of the author.