Taiwan’s economy could expand by as much as 5 percent this year, fueled by its technology manufacturing edge amid a global artificial intelligence (AI) boom, while tariff exemptions on semiconductor products keep the country’s levy burden low despite a headline rate of 20 percent, UBS Investment Bank said yesterday.
“Although Washington has imposed a 20 percent tariff on goods from Taiwan, exemptions for semiconductors keep the weighted average low,” UBS senior economist for Asia and China William Deng (鄧維慎) said.
The growth momentum is expected to extend into next year, with technology companies’ revenue projected to rise 17 percent, UBS research head Randy Abrams said on the sidelines of the UBS Taiwan Summit in Taipei.
Photo: Vanessa Cho, Taipei Times
The annual forum, which drew more than 400 investors — the highest attendance on record — underscores strong global interest in Taiwan’s technology sector, Abrams said.
Taiwanese technology stocks are trading at 18 to 19 times earnings, above the long-term average of 15, reflecting optimism from AI-driven demand across servers, power modules and printed circuit board substrates, he said.
Nvidia Corp’s GB300 graphics processing unit (GPU)-based server rack is expected to scale faster, potentially overtaking its GB200 model, although geopolitical and tariff risks remain a concern, he said.
Shipments of Nvidia GPU server racks are forecast to reach 25,000 to 30,000 units this year, and 100,000 units next year, supporting Taiwan’s suppliers of power solutions, cooling systems and advanced substrates, he said.
UBS semiconductor analyst Sunny Lin (林莉鈞) added that cloud AI demand could expand 30 percent next year, while non-AI segments might rebound 15 percent as inventories normalize.
Despite lingering concerns about a potential bubble in Taiwanese equities and AI overall, capital spending by cloud service providers continues to grow rapidly, and foundry leaders are running fabs at high utilization rates, indicating robust underlying demand, she said.
The rollout of 2-nanometer node technology combined with advanced chip packaging is expected to trigger a new investment cycle starting in 2027, she said.
Emerging areas such as silicon photonics and co-packaged optics also warrant close attention, with multi-rack, scale-out architecture projected to take shape by 2028, Lin said.
UBS non-tech analyst Ally Chen (陳玟瑾) said the market is not cheap, but valuations are not stretched.
Earnings growth remains concentrated in large-cap companies, with MSCI Taiwan’s growth forecast at about 16 percent.
If AI server products are delivered on schedule, the sector could see strong investment returns, paving the way for upward earnings revisions next year and supporting local equities, Chen said.
She also highlighted potential monetary support.
With the US Federal Reserve expected to cut rates this month, next month and in December, Taiwan’s central bank might follow by easing next year, particularly as domestic consumption growth remains weak outside AI-driven exports, she said.
“Such monetary support would be positive for the broader market,” she said.
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