Taiwan Confident in Surpassing 3% Growth Target in 2026

TAIPEI, October 23, 2025 — Taiwan’s government expects its economy to expand by more than 3% in 2026, boosted by booming global demand for artificial intelligence (AI) applications and continued strength in the semiconductor industry, according to Economic Affairs Minister Kung Ming-hsin.

Speaking to reporters in Taipei on Thursday, Kung expressed confidence that Taiwan’s AI-driven manufacturing and export sectors will sustain momentum into next year, outpacing earlier official forecasts.

“Given the speed at which AI demand is growing, I’m quite optimistic that Taiwan’s economy can exceed 3% growth next year,” Kung said.

His comments signal a more upbeat outlook than the Central Bank of Taiwan’s September projection, which forecasted 2.68% GDP growth for 2026 — a slowdown from the estimated 4.55% expansion in 2025.

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AI Demand Anchors Taiwan’s Growth Prospects

Taiwan plays a critical role in the global AI supply chain, particularly through its world-leading semiconductor industry. The island is home to Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker and a key supplier to Nvidia, Apple, and other major tech firms fueling the AI revolution.

Analysts say continued investment in AI chips, servers, and data centers is likely to offset headwinds from U.S. trade tariffs and global demand uncertainties.

“AI hardware demand is creating a new cycle of capital spending in Taiwan’s tech sector,” said Angela Chen, senior economist at Formosa Capital. “TSMC and its suppliers are positioned to drive exports and manufacturing growth even amid trade tensions.”

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Tariffs Remain a Key Risk Factor

Taiwan’s central bank last month cited U.S. tariffs on Taiwanese exports — currently set at 20% for many goods — as a key downside risk to its growth outlook. However, semiconductors remain exempt from the tariff measures, preserving the competitiveness of Taiwan’s most valuable export segment.

Kung said the government is continuing talks with Washington to seek tariff relief on affected non-chip exports, including electronics components and machinery.

“We’re maintaining open communication with the U.S. to ensure fair treatment for our industries,” Kung said.

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Economic Data Outlook

Taiwan’s Directorate-General of Budget, Accounting and Statistics (DGBAS) is expected to release its preliminary Q3 GDP data next week, offering insight into short-term momentum. The full-year and 2026 forecasts will be updated later this quarter.

Economists anticipate strong third-quarter figures, driven by robust chip exports and a rebound in private investment following a surge in AI-related production orders.

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Broader Economic Context

The AI-led boom has provided a rare bright spot for Taiwan’s export-heavy economy, which faced pressure earlier this year from slowing global electronics demand and higher input costs. With U.S. tariffs and geopolitical risks still weighing on outlooks, policymakers are balancing industrial competitiveness with macroeconomic stability.

Still, Taiwan’s deep integration into AI hardware supply chains — from chip fabrication to advanced packaging — is expected to underpin growth well into 2026 and beyond.

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Key Takeaways

• 2026 growth forecast: Above 3%, according to Economic Minister Kung Ming-hsin.
• Previous forecast: 2.68% (Central Bank of Taiwan, September).
• 2025 growth estimate: 4.55%.
• Growth drivers: AI demand, semiconductor exports, tech manufacturing.
• Risks: U.S. trade tariffs (20%), global demand uncertainty.
• Next data release: Q3 GDP preliminary figures due next week.