Thousands of Taiwanese Become Millionaires in Race for AI Chips

Taiwan's chip manufacturing boom is leading to a sharp increase in the number of millionaires on the island, according to UBS. The island's semiconductor sector, led by TSMC, is boosting its economy and exports. But inequality in Taiwan has widened as tech industries grow faster than other sectors.

Taiwan's status as a global chip manufacturing hub has supported the island's economic resilience.

The industry is so in demand that Swiss bank UBS's annual wealth report, released Wednesday, predicts Taiwan will produce a slew of new dollar millionaires over the next five years.

Last year, Taiwan was home to nearly 790,000 dollar millionaires. UBS predicts that number could increase by 47% to about 1.16 million millionaires by 2028, making Taiwan the leader among the 56 global markets analyzed in the bank's report.

However, the population size of millionaires in Taiwan is significantly smaller compared to the United States.

There were nearly 22 million millionaires in the U.S. last year, according to UBS. That number is expected to grow 16% to 25.5 million millionaires over the next five years.

UBS attributes Taiwan's growing wealth to its semiconductor chip industry, which is “poised to reap the benefits of the artificial intelligence boom.”

Taiwan is home to Taiwan Semiconductor Manufacturing Company, or TSMC, the world's largest contract chipmaker and the sole supplier of key advanced chips to Apple, Nvidia and others.

Chip boom increases wealth but increases inequality.

While UBS expects a significant increase in the number of millionaires in Taiwan, most of the island's 23 million people are unlikely to benefit from the AI ​​boom.

UBS data shows that wealth inequality in Taiwan increased by about 10% from 2008 to 2023.

According to UBS, the median net worth in Taiwan in 2023 was $110,521 per adult. The average net worth was nearly three times that, at $302,551.

This means that people at the top of the scale have become much richer than those below, skewing average wealth figures.

Official data from Taiwan confirm this trend, showing that the wealth gap between the richest 20% and poorest 20% of households has quadrupled in three decades.

Taiwan's Gini coefficient, which measures inequality, also increased from 1991 to 2021, when the last two official welfare surveys were conducted.

Taiwan's technology sector is growing faster than non-tech sectors.

One of the key factors contributing to Taiwan's growing wealth inequality is that its tech industry is doing better than non-tech industries.

TSMC's performance has soared amid the AI ​​boom, with second-quarter sales up 40% year-on-year, beating analysts' expectations. On Monday, TSMC's New York Stock Exchange-listed shares briefly crossed the $1 trillion mark.

It's not just TSMC. The chip giant's rise has created an entire tech ecosystem in Taiwan, much of it focused on hardware.

This ecosystem drives Taiwan’s economy even amid long-standing geopolitical uncertainty, as China claims the island as its own territory. The country’s GDP grew 6.5% in the first quarter of the year from a year earlier, driven by exports of machinery and electrical equipment, which rose nearly 28% from a year earlier. However, domestic demand growth was modest, at just 1% over the same period.

Ma Tieying, a senior economist at Singapore's DBS bank, wrote in a note on Wednesday that she expects global demand for high-performance chips from Taiwan to continue thanks to advances in AI.

However, the recovery of traditional, non-tech manufacturing will still be hampered by the economic slowdown in China, which accounts for about one-third of Taiwan's total exports, Ma added.