Taiwan's economy grows 8.6% in 2025, fastest rate in 15 years, turbocharged by the AI boom

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TAIPEI, Taiwan (AP) — Taiwan’s economy expanded at an 8.6% annual rate last year, the fastest pace in 15 years, as its export-focused industries were buoyed by the frenzy over artificial intelligence and a surge of shipments to the U.S..

The advanced estimate released by Taiwan’s statistics agency on Friday was much better than economists had forecast. It was the strongest growth rate since 2010.

Taiwan set a trade deal earlier this month with U.S. President Donald Trump’s administration. It lowered U.S. tariffs on imports from the island to 15% from 20% in exchange for pledges of at least $250 billion of investment in the U.S. in areas such as semiconductors and AI. That could power higher exports, further charging the economy this year, economists say.

“We expect AI-related demand to continue underpinning Taiwan’s export performance into 2026, supporting overall economic growth amid sustained global AI investment,” Bank of America economists Xiaoqing Pi and Helen Qiao wrote in a recent note.

Taiwan is a major manufacturer of AI servers, computer chips and precision instruments. Its exports jumped nearly 35% last year from a year earlier, led by technology-related shipments. Shipments to the U.S. surged 78%.

The AI boom has also propelled Taiwan’s leading technology companies to record profits and revenues. Taiwan's TSMC, the world’s biggest contract chipmaker, counts Nvidia as its key client and is one of the largest companies in the world by market value — and electronics giant Foxconn, which makes AI servers for Nvidia and assembles products for Apple.

However, growth this year will likely slow since it's building on a high base, economists say.

Deutsche Bank estimates Taiwan’s economy will grow 4.8% in 2026. Growing concerns that the AI boom may be a bubble are a key risk given Taiwan's dependence on tech exports.

Uncertainty over U.S. tariffs under Trump are another worry. So are tensions with Beijing. China claims Taiwan, a self-ruled island, as its own territory. China conducted large-scale military drills around Taiwan in late December, renewing concerns over a possible blockade or seizure by Beijing.