Increased AI exports result in a new record high
Taiwan's exports have reached an all-time high, with a surge in high-performance chips and AI servers that has propelled the country to the forefront of global technology exports. In June 2025, exports reached US$53.32 billion, marking a significant 23.5% year-on-year increase. This surge is primarily driven by the soaring global demand for advanced semiconductor technologies, particularly those powering artificial intelligence, smartphones, and cutting-edge computing systems.
Taiwan's technological leadership, led by Taiwan Semiconductor Manufacturing Company (TSMC), plays a crucial role in this success. TSMC holds a dominant position in advanced chip manufacturing, producing 92% of the world’s most advanced logic chips and controlling around 64% of the global dedicated contract chipmaking market as of 2024. The company manufactures 70% of smartphone chipsets and a significant portion of automotive microcontrollers, giving Taiwan an unmatched edge, especially in sub-5nm process technology essential for next-generation computing.
The global acceleration in AI development has driven strong demand for AI chips and servers, leading Taiwanese companies like TSMC to expand production capacity to meet international needs. This sector is a major contributor to Taiwan’s record export levels, with exports reaching $154 billion in Q2 2025 and hitting new monthly highs.
The expanding trade surplus with the US and the strategic importance of Taiwan's semiconductor exports have heightened trade tensions. The US has become Taiwan’s top export destination, reflecting the deep integration of Taiwan’s semiconductor sector with the US tech industry. This has strengthened industrial development ties and wage growth prospects in Taiwan due to the US’s status as a high-income economy. However, the expanding trade surplus and the strategic importance of Taiwan's semiconductor exports have raised concerns about potential US tariffs on Taiwanese goods, and the strengthening Taiwan dollar due to export surges could affect competitiveness.
The US government's CHIPS and Science Act has catalyzed over $450 billion in private semiconductor investments domestically to build fabrication capacity, indicating a strategic push to diversify supply chains away from Taiwan in the long term. However, Taiwan remains indispensable for the most advanced chips for now, underscoring a complex trade relationship marked by interdependence alongside strategic competition.
The strong momentum is expected to extend into July, with export growth projected at 15 to 20 percent. For the first half of the year, exports rose 25.9 percent, while imports climbed 20.5 percent. Despite this positive outlook, the ministry warned of potential headwinds in the second half, citing lingering uncertainties over US tariffs, global interest rate policies, and possible weakness in consumer electronics demand.
Sources: [1] https://www.reuters.com/business/us-china-tech-war-threatens-to-hurt-tsmc-2021-08-12/ [2] https://www.bloomberg.com/news/articles/2025-07-01/taiwan-s-tech-exports-surge-to-record-on-ai-boom-us-demand [3] https://www.forbes.com/sites/chrisdevonshirelloyd/2025/06/15/taiwan-remains-the-worlds-leading-semiconductor-foundry-despite-chinese-rivalry/ [4] https://www.focus-tan.com/en/news/economy/us-becomes-taiwans-largest-export-destination-in-may-2025/
The technological leadership of Taiwan, spearheaded by Taiwan Semiconductor Manufacturing Company (TSMC), continues to thrive in artificial intelligence (AI) as the surging global demand for AI chips and servers significantly contributes to Taiwan's record export levels. With TSMC's dominance in advanced chip manufacturing and its production of AI-driven chips essential for next-generation computing, the company plays a pivotal role in Taiwan's continued growth in the AI sector.
