Taiwan Catching China Is Pure Economic 'Prosperidade'

July 10, 2026 at 5:00 AM GMT+10

Boom times in Taiwan. Photographer: Alex Wong/Getty Images

Save

Translate

Takeaways by Bloomberg AI

Taiwan’s economy ranks just 21st in the world in size at $884 billion. Yet the home to 23 million people living 155 miles from Fuzhou between the East and South China seas – a place Portuguese sailors called Formosa, which means beautiful island - is a world beater.

Gross domestic product expanded 8.8% in 2025, and the median estimate of economists surveyed by Bloomberg shows even faster growththis year of 9.5%, or more than three times the global economy overall. Both mark a reversal from as recently as 2023, when the island was a laggard on the world stage, with GDP increasing a meager 1.1%. Investors have taken notice, making Taiwan home to the fifth-biggest stock market - and gaining on those in the US, China, Japan and Hong Kong.

World Beater

Economists forecast Taiwan's gross domestic product this year will expand more than three times faster than the world overall

Source: Bloomberg

Taiwan’s rise has been fueled by a surge in exports of semiconductors and electronic parts to the US, the center of the boom in artificial intelligence. And now, for the first time since 1992, it sells more goods and services to the US than the far bigger People's Republic of China. The tally this year through May is $116.1 billion versus $104.2 billion, according to data compiled by Bloomberg, propelling Taiwan to No. 3 on the list of exporters to America behind Mexico and Canada. None of the 10 largest economies selling to the US come close to Taiwan's 12-fold increase from the two decades prior to October 2024 when exports began their unprecedented expansion.

Milestone Reached

First time since 1992, Taiwan is selling more goods and services to the US than China

Note: Quarterly data

Source: International Monetary Fund data complied by Bloomberg

Aside from record exports, Taiwan’s currency vies with Singapore’s dollar as the most stable, it has the lowest and least volatile inflation rate since 2008, rising wages creating unprecedented real earnings, booming real estate and the bond yields competing with Switzerland for the world’s lowest, according to data compiled by Bloomberg.

Nothing in the prevailing media narrative concerning Taiwan acknowledges such attributes because its diminishing diplomatic friends are outnumbered 15-to-1 by nations bowing to China’s wishes with their ban on the island’s embassies. President Donald Trump, for whom everything is transactional, recently questioned the necessity of defending the island that keeps the US, China and the rest of the world waiting for the 21st century's most important item: fingernail-sized pieces of silicon holding billions of microscopic electronic components.

Taiwan is unique in providing the majority of mass-produced 10- and 14-nanometer chips in diodes, transistors, rectifier and integrated circuits -- essentially the brains for smartphones, virtual reality headsets, autonomous driving, cloud computing transition, electric vehicles, artificial intelligence and American national security. While China is a major market for Taiwanese exports and investments, its dependence on Taiwanese management of semiconductors in manufacturing and military industries is perpetual thanks to decades of economic integration within mainland China.

More than 53% of Taiwan's exports are electrical machinery and equipment, electronics and computer related products. Taiwan semiconductors sold to the US in April increased 41% from the same month a year earlier, following 46% growth in March, according to Lynn Song, chief economist for Greater China at Amsterdam-based financial company ING. Among the 1,060 members in the Taiwan Stock Exchange Index, semiconductors and technology hardware companies make up 78% of corporate Taiwan's market value. The weighting was 64% last year, 57% five years ago and 45% in 2015, according to data compiled by Bloomberg.

The US correlation is similarly accelerating. Among the members of the S&P 500 Index, the semiconductor group with 19 companies accounts for 16% of the market value, making it the largest of 52 industry groups in the benchmark. Sales for these companies increased sevenfold on average over the past five years, becoming the fastest-growing business in the US and double the rate of No. 2 Internet Media and Services. Revenue on average will grow 78% this year and 46% in 2027 as the fastest-growing industry in the US, according to data compiled by Bloomberg.

Bloomberg Supply Chain analysis shows the largest chip companies in the US increasingly rely on their Taiwan suppliers. Nvidia Corp., valued at $5 trillion and based in Santa Clara, California, pays 63% of its total cost of production, or almost two-thirds, to Taiwan firms. The $2 trillion Broadcom Inc. of Palo Alto, California, the $890 billion Advanced Micro Devices Inc. in Santa Clara, and the $205 billion Qualcomm Inc. of San Diego all send about one-third of their production costs to Taiwan companies.

Get the Singapore Edition newsletter in your inbox.

Go beyond the headlines with insights into one of Asia's most dynamic economies. Delivered weekly.

Bloomberg may send me offers and promotions.

Sign Up

By submitting my information, I agree to the Privacy Policy and Terms of Service.

Taiwan Semiconductor Manufacturing Co., the world's sixth-largest company by market value, is the biggest beneficiary of trade with America, with record US revenue of $91 billion, or 74% of total sales in 2025, up from 64% during the past decade. Integrated circuit company Hon Precision Inc. became five times more valuable this year at $37 billion after its initial public offering. Revenue will increase 75% in 2026, and 66% and 65% in the ensuing two years, beating the benchmark Philadelphia Semiconductor Index’s 67%, 42% and 22%, according to 17 analysts contributing their forecasts to Bloomberg.

Booming Business

Taiwan Semiconductor's generated $91 billion in revenue from the US, a 47% increase from a year earlier

Source: Bloomberg

The $25 billion Winbond Electronics Corp. rose ninefold during the past 12 months as analysts increased their 2026 revenue forecast by 178%, an appreciation that is 5.6 times the global semiconductor benchmark.

It’s doubtful that those 16th century Portuguese sailors could have envisioned the economic juggernaut that Taiwan has become. If they had, perhaps they might have chosen another word for the island: Prosperidade, which means prosperity.

More From Bloomberg Opinion: