Economic growth acceleration credited to TSMC and AI advancements by National Democratic Congress
Taiwan Set to Overtake South Korea in GDP Per Capita, Thanks to Tech Industry Success
In a significant development, Taiwan is expected to surpass South Korea in GDP per capita this year for the first time in 22 years, according to a report in the Korea Economic Daily. This shift can be largely attributed to the success of Taiwan Semiconductor Manufacturing Co (TSMC) and the boom in artificial intelligence (AI) applications.
TSMC, a cornerstone of Taiwan's tech industry, has cemented its lead in the global pure foundry business. According to TrendForce, TSMC's global market share rose to a record 70.2 percent in the second quarter of this year, leaving Samsung Electronics Co's foundry business far behind in second place with a 7.3 percent share.
The success of TSMC can be traced back to the government's restrictions on technology exports, which have protected Taiwan's tech industry from foreign competition. This protective measure has allowed companies such as TSMC to maintain their global lead.
TSMC's work culture, which focuses on never competing with its customers and providing tailored products to satisfy their needs, has also played a crucial role in its success. The company has won the trust of its customers, which has helped it secure strong positions in price negotiations with customers in advanced processes, semiconductors, and AI devices.
The appreciation of the New Taiwan dollar against the US dollar has not hindered the bargaining power of Taiwan's niche products in price negotiations. This strength, combined with the boom in AI applications, is expected to continue benefiting TSMC and Taiwan's economy as a whole this year, as global demand for AI applications remains solid.
Meanwhile, South Korea's significant dependence on the Chinese market has made it vulnerable to a supply glut among Chinese firms, affecting South Korea's GDP. Some South Korean products have been replaced by Chinese goods, particularly in the auto industry.
Minister Yeh Chun-hsien, the head of Taiwan's National Development Council, foresaw several years ago that Taiwan had great potential to overtake South Korea in GDP per capita. He attributes this forecast to the success of TSMC and the boom in AI applications.
The Directorate-General of Budget, Accounting and Statistics has forecasted that Taiwan's GDP growth this year would be 4.45 percent, up from an earlier estimate of 3.10 percent. This growth, coupled with the expected GDP per capita of US$38,066 this year, compared with South Korea's expected US$37,430, positions Taiwan well for this significant milestone.
In conclusion, Taiwan's tech industry, spearheaded by TSMC, has positioned itself well in the global market, particularly in the semiconductor and AI sectors. Government restrictions on technology exports have protected this industry from foreign competition, allowing companies like TSMC to maintain their global lead. As a result, Taiwan is on track to overtake South Korea in GDP per capita this year, marking a significant achievement for the country's economy.
