Taiwan's AI boom is expected to lead to a surge in millionaires

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People enjoying the view of Taipei 101 tower.
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  • Taiwan's semiconductor boom is expected to lead to a surge in the number of Taiwanese billionaires, according to UBS.
  • Taiwan's semiconductor sector, led by TSMC, is strengthening its economy and exports.
  • But the gap is widening as Taiwan's technology industry growth has been stronger than other sectors.

Taiwan maintains its position as the global semiconductor center and its economy is performing strongly.

Taiwan's financial industry is booming and is expected to produce a large number of new US dollar billionaires over the next five years, according to Swiss bank UBS's annual wealth report released on Wednesday.

Taiwan was home to about 790,000 millionaires last year, and UBS predicts that number will grow 47 percent to about 1.16 million by 2028, the most among 56 global markets the bank analyzed in the report.

That said, Taiwan's billionaire population pales in comparison to that of the United States.

According to UBS, there were about 22 million billionaires in the U.S. last year, and that number is expected to grow 16% over the next five years to 25.5 million.

UBS attributes Taiwan's wealth growth to its semiconductor chip industry, which it says is “positioned to benefit from the artificial intelligence boom.”

Taiwan is home to Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker and the sole supplier of major advanced chips to the likes of Apple and Nvidia.

Tip rush increases wealth but widens inequality

UBS predicts the number of Taiwan's billionaires will soar, but many of the country's 23 million people are unlikely to benefit from the AI ​​boom.

Wealth inequality in Taiwan grew by about 10% between 2008 and 2023, according to UBS data.

According to UBS, the average net worth per adult in Taiwan will be $110,521 in 2023. The average net worth is expected to be $302,551, nearly three times higher.

This means that the top wealthy have become much better off than those at the bottom during that period, and average wealth has risen.

Official data from Taiwan bears out this trend, showing that the wealth gap between the top and bottom 20% of households has quadrupled in 30 years.

Taiwan's Gini coefficient, a measure of inequality, also increased from 1991 to 2021, the period when the last two official wealth surveys were conducted.

Taiwan's high-tech sector growth outpaces non-high-tech sector

One key trend contributing to wealth inequality in Taiwan is the fact that Taiwan's high-tech industries are doing better than non-high-tech industries.

TSMC's performance has soared on the back of the AI ​​rush, with second-quarter sales up 40% from the same period last year, beating analyst expectations. On Monday, TSMC's ADRs listed on the New York Stock Exchange briefly surpassed $1 trillion in market capitalization.

It's not just TSMC: the rise of the semiconductor giant has created an entire technology ecosystem in Taiwan that revolves around hardware.

This ecosystem has helped drive Taiwan's economy through a period of geopolitical uncertainty as China claims the island as its own. Taiwan's GDP grew 6.5% year-on-year in the first quarter of this year, driven by a nearly 28% surge in exports of machinery and electrical equipment. But domestic demand has grown more slowly, up just 1% over the same period.

Ma Tieying, a senior economist at Singapore-based DBS Bank, said in a note on Wednesday that he expects demand for Taiwan's high-performance chips to continue to rise due to the global AI push.

But the recovery of non-high-tech, traditional manufacturing is expected to remain hampered by an economic slowdown in China, which accounts for about a third of Taiwan's total exports, Ma added.

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