National Development Council (NDC) Minister Yeh Chun-hsien (葉俊顯) yesterday attributed a forecast that Taiwan would overtake South Korea in GDP per capita to the success of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and a boom in artificial intelligence (AI) applications.
Yeh’s comments came after the Korea Economic Daily on Sunday reported that Taiwan is expected to surpass South Korea in GDP per capita this year for the first time in 22 years, citing forecasts from agencies in both nations.
Taiwan’s GDP per capita would be US$38,066 this year, compared with South Korea’s expected US$37,430, the newspaper reported.
Photo: Wu Hsin-tien, Taipei Times
Yeh told reporters he foresaw several years ago that Taiwan had great potential to overtake South Korea in GDP per capita.
TSMC has played a critical role in the GDP competition with South Korea, as the contract chipmaker has cemented its lead in the global pure foundry business — a lead expected to continue for at least the next five to 10 years, he said.
Taipei-based advisory firm TrendForce Corp (集邦科技) said in a report last month that TSMC’s global market share rose to a record 70.2 percent in the second quarter of this year, up from 67.6 percent in the first quarter, on the back of the fast-growing AI sector.
TSMC has left Samsung Electronics Co’s foundry business far behind in second, with the South Korean firm having a 7.3 percent share, TrendForce said.
TSMC, as a contract chipmaker without launching its own brand, has won the trust of its customers by never competing with them and providing tailored products to satisfy their needs, while its work culture has also contributed to its success, Yeh said.
In addition, government restrictions on technology exports have protected Taiwan’s tech industry from foreign competition and allowed companies such as TSMC to maintain their global lead, he said.
Taiwan’s tech firms have positioned themselves well in price negotiations with customers in advanced processes, semiconductors and AI devices, he said.
“Even though the New Taiwan dollar appreciated against the US dollar, Taiwan’s niche products have still given exporters bargaining chips in price negotiations,” Yeh said.
As global demand for AI applications remains solid, TSMC and Taiwan’s economy as a whole would continue to benefit this year, he said.
“It is very possible that local GDP growth would top 4 percent this year,” Yeh said.
The Directorate-General of Budget, Accounting and Statistics has forecast that Taiwan’s GDP growth this year would be 4.45 percent, up from an earlier estimate of 3.10 percent.
South Korea has invested heavily in China and depends significantly on the Chinese market, so a supply glut among Chinese firms has hurt South Korean companies and affected South Korea’s GDP, Yeh said.
In addition, some South Korean products have been replaced by Chinese goods, particularly in the auto industry, while Taiwan’s technology export restrictions have helped TSMC continue to grow, he added.
Taiwan is projected to lose a working-age population of about 6.67 million people in two waves of retirement in the coming years, as the nation confronts accelerating demographic decline and a shortage of younger workers to take their place, the Ministry of the Interior said. Taiwan experienced its largest baby boom between 1958 and 1966, when the population grew by 3.78 million, followed by a second surge of 2.89 million between 1976 and 1982, ministry data showed. In 2023, the first of those baby boom generations — those born in the late 1950s and early 1960s — began to enter retirement, triggering
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