Rising demand for AI, high-performance computing, and cloud data centers is driving rapid growth in Taiwan’s exports, production, and investment. However, the benefits of economic growth have yet to spread evenly across the economy. Shih-Chang Huang, Director of the Third Research Division at the Chung-Hua Institution for Economic Research (CIER), said Taiwan is showing increasingly pronounced K-shaped divergence across three areas: export structure, AI adoption, and income distribution. Policymakers should preserve Taiwan’s global leadership in semiconductors and artificial intelligence while accelerating the modernization of traditional industries and small and midsize businesses, thereby strengthening the economy’s overall resilience.
Technology Products Approach 80% of Exports as Industrial Growth Remains Uneven
Statistics from the Ministry of Finance show that Taiwan’s exports totaled US$661.55 billion in the first nine months of 2026, up 46.2% from a year earlier. Combined exports of electronic components and information, communications, and audiovisual products grew 59.5%. These two major technology product categories accounted for 79% of total exports, indicating that export growth remains heavily concentrated in the technology sector.
Huang noted that technology products’ share of Taiwan’s exports rose from 47.6% in 2019 to 74.2% in 2025, while the share of nontechnology products fell from 52.4% to 25.8%. While AI-related industries have enjoyed robust exports, traditional sectors such as base metals and plastic and rubber products continue to face growth pressures. This trend shows that the benefits of strong external demand for technology products have yet to spread fully across the economy.
Competitive disparities also persist within the semiconductor industry. According to TrendForce, China’s share of global mature-node semiconductor capacity is projected to rise from 33% in 2024 to 45% in 2027, while Taiwan’s share is expected to fall from 42% to 37%. Although Taiwan retains advantages in advanced processes and AI chip supply chains, its mature-node industry must move toward specialized applications and greater differentiation to reduce the risks arising from price competition and the redistribution of production capacity.
AI Adoption Varies across Industries as SME Transformation Needs to Accelerate
AI adoption also varies significantly across industries. A survey by the Artificial Intelligence Foundation (AIF) shows that Taiwan’s Industrial AI Adoption Index rose from 36.77 in 2025 to 46.32 in 2026. The information and communications technology industry scored 52.7, compared with only 43.87 for traditional manufacturing and 44.86 for retail and trade services. A survey by the Institute for Information Industry also found that only 28% of manufacturers had implemented AI. Meanwhile, the Ministry of Economic Affairs’ 2025 White Paper on Small and Medium Enterprises reported that only 7.4% of SMEs had adopted or planned to adopt AI.
Huang warned that disparities in companies’ ability to adopt AI could further widen gaps in productivity, profitability, and market competitiveness. Traditional industries and SMEs could become trapped in a cycle of underinvestment, delayed transformation, and declining competitiveness. Lowering the technological, financial, and talent barriers to AI adoption among SMEs will therefore be critical to strengthening the competitiveness of Taiwan’s industries as a whole.
Income Imbalances Call for the Growth Benefits to Reach More Industries
According to the Directorate General of Budget, Accounting and Statistics, employee compensation as a share of GDP fell from 51.06% in 1992 to 43.1% in 2024, while the corporate operating surplus share rose from 29.49% to 35.06%. Taiwan’s stock market capitalization is also highly concentrated among major companies, with the 10 largest listed companies accounting for approximately 62% of the total. This reflects a broader concentration of capital market resources and industrial growth opportunities.
Huang elaborated that Taiwan faces more than cyclical economic fluctuations. It is experiencing structural divergence in growth momentum, industrial competitiveness, and income distribution. While preserving Taiwan’s leadership in AI and semiconductors, the government should strengthen the upgrading of traditional industries, help SMEs adopt AI, and ensure that productivity gains and the benefits of economic growth are shared more broadly. Only by balancing technological competitiveness, industrial transformation, and income distribution can Taiwan prevent excessive concentration of economic growth and strengthen its overall economic resilience and capacity for sustainable development.
Source: Economic Daily News (October 22, 2026). Where Are the Signs of a K-Shaped Economy? CIER Warns of Growing Divergence Across Three Levels. Economic Daily News. https://money.udn.com/money/story/10869/9831813