Stock Market in Taiwan Potentially Reverses Thursday's Advancements
Taiwan's Technology Sector Thrives Amidst Global Uncertainties
The Taiwan Stock Exchange (TSE) saw a significant rise on Thursday, finishing sharply higher and surpassing the 24,000-point plateau. This upward trend was observed in two out of three trading days since the TSE's two-day losing streak.
The technology sector in Taiwan is experiencing strong performance, driven by high-tech exports such as semiconductors and AI-related products. In Q2 2025, Taiwan's GDP surged by 7.96% year-on-year, marking the strongest growth in four years. This growth was largely fueled by a 34.06% increase in AI and high-tech manufacturing exports, which constitute about 70% of total shipments.
Taiwan's semiconductor giant, TSMC, saw revenue grow by 38.65% to $31.7 billion, highlighting Taiwan's dominant global position in advanced chip production (60% market share) and AI/high-performance computing wafers (74%).
However, Taiwan's economy remains vulnerable due to its export-driven nature and weak domestic consumption growth. The U.S.-China tech rivalry and associated geopolitical risks loom large, with ongoing U.S. tariff threats on semiconductors potentially impacting Taiwan's key export sector. In 2024, Taiwan had a $73.9 billion trade surplus with the U.S., largely on semiconductor and AI server demand.
The U.S. government under Trump proposed tariffs up to 32% on Taiwanese semiconductor products in early 2025, although a 90-day pause and subsequent negotiations have kept the final tariff rate provisional, currently around 20%. Taiwanese officials are actively engaged in talks to reduce the tariff impact.
Economic forecasts reflect this tension. While Taiwan's GDP growth is projected to moderate to about 3.05% for 2025, the strong export momentum from early 2025 is expected to slow in the latter half due to the tariff uncertainty and a high base effect. Export growth, after very high first-half gains, is forecast to slow to single digits by Q3 and Q4.
TSMC is investing heavily ($165 billion) to diversify its supply chain and build advanced capacity in the U.S. by 2026, partly to mitigate risks from geopolitical and trade disruptions.
Meanwhile, crude oil prices fell on Thursday due to inconsistency in the U.S. stance on Russia and its invasion of Ukraine. West Texas Intermediate crude for September delivery was down $0.49 or 0.76 percent at $63.86 per barrel.
In the broader market, the Dow Jones Industrial Average (Dow) stumbled 224.48 points or 0.51 percent on Thursday. CTBC Financial had a 0.12 percent increase, while First Financial, Mega Financial, and other companies experienced decreases.
Later today, Taiwan will release July data for imports, exports, and trade balance. In June, Taiwan's exports surged an annual 33.7 percent, and imports were up 17.3 percent on year, resulting in a trade surplus of $12.07 billion.
The global forecast for Asian markets remains uncertain due to conflicting reports on U.S. tariffs. Traders expressed concerns about the economic impact of Trump's trade policies as new tariffs took effect on Thursday. Despite these uncertainties, Taiwan's technology sector continues to adapt and invest, aiming to maintain its robust performance in the complex global environment.
The Taiwanese government is actively engaging in talks to reduce the potential tariff impact on Taiwanese semiconductor exports, a key component of its economy. To mitigate risks from geopolitical and trade disruptions, TSMC, Taiwan's semiconductor giant, is investing $165 billion to diversify its supply chain and build advanced capacity in the U.S. by 2026, making it an attractive investment opportunity in the stock-market for those interested in the finance sector.
