Booming AI Industry Led to Boost in Taiwan Exports; China Falls Behind

In August, Taiwan's exports surged to a record $43.64 billion, surpassing expectations due to heightened demand for chips driven by the expanding artificial intelligence (AI) industry.

This increase overcame challenges from reduced demand in China.

Exports to the United States (US) soared 78.5% to a new high of $11.89 billion, while exports to China rose only 1.0%, a stark contrast to the previous month's 13.5% decline.

Total shipments of electronic components edged up 0.1% to $15.15 billion, although semiconductor exports declined by 0.5%.

Imports rose 11.8% to $32.14 billion, falling short of the 15.0% growth forecasted by economists.

Machinery and electrical equipment, which make up about two-thirds of Taiwan's exports, saw a 22% increase, significantly outpacing the 6.6% growth recorded in July and the 18.6% year-to-date growth.

Taiwan Exports Surpass Predictions Due to Booming AI Sector

According to the finance ministry, Taiwan's August export growth exceeded the 7.35% increase forecasted by a Reuters poll and the 3.1% rise recorded in July, marking the 10th consecutive month of growth.

This robust performance was driven by heightened demand for AI products and hardware.

Key contributors to this growth included audiovisuals, information, and computer products, particularly finished smartphones.

The ministry said in a statement:

"August's export value hit a record as business for AI and high-performance computing continued to be strong, as well as international brands stocking up on new products."

Taiwanese firms, such as Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC)—the world's leading contract chipmaker—play a crucial role as suppliers to major tech companies like Apple and Nvidia.

The global surge in AI technology has further fuelled this demand, reflecting the sector's transformative impact on the tech industry.

Taiwan Reports Negative Growth in Imports But Not a Concern

In August, while exports experienced remarkable growth, import growth slowed.

According to ING, imports increased by 11.8% year-on-year, down from 16% in the previous period.

Notable declines were observed in several categories: mineral products fell by 6.9%, vehicles by 5%, textiles by 4.2%, and animal and vegetable products decreased by 11.7% and 16.1%, respectively, due to a general drop in prices.

Despite these declines, imports of electrical equipment and machinery showed resilience, growing by 20.1% thanks to increased shipments of electronic parts.

This dynamic contributed to a trade surplus that more than doubled to $11.5 billion from $4.8 billion in July, surpassing the projected $11.2 billion.

This stronger-than-expected performance is anticipated to positively impact Taiwan's third-quarter GDP.

Taiwan Forecasts More Gains in September

The finance ministry anticipates a "gradual upward slope" in export growth during the second half of the year, driven by the peak season for exports and the end-of-year holiday shopping surge in key Western markets, including the United States and Europe.

The ministry forecasts that September exports could increase by 5% to 9% year-on-year.

Given this positive trend, it would not be surprising if Taiwan's export figures set new records once again.