By Nicholas Larsen, International Banker
Buoyant demand for semiconductors, servers and data-centre infrastructure is lifting growth across East Asia. Taiwan, for instance, exported $74.83 billion of goods in June, up 40.3 percent from a year earlier, marking the 32nd consecutive month of annual growth. Information, communications and audio-visual products surged by 72.3 percent to $33.92 billion, and electronic components—principally semiconductors—increased by 32.8 percent to $25.39 billion. With these two categories generating almost four-fifths of total exports, Taiwan’s economy is one of several East Asian economies recording exceptional trade-driven growth stemming from the AI revolution.
South Korea has experienced a similarly forceful upswing. The country’s information and communications technology (ICT) exports reached a record $253.9 billion during the first half of 2026, more than double the $115.1 billion recorded a year earlier.
The current expansion is centred on advanced processors, high-bandwidth memory, servers, storage systems, networking equipment and the machinery and materials required to produce them.
Such figures underscore just how significant the global AI-investment boom has been for reviving East Asia’s long-established external growth model. Whereas previous export cycles drew strength from consumer electronics, vehicles, machinery and lower-cost manufactured goods, the current expansion is centred on advanced processors, high-bandwidth memory, servers, storage systems, networking equipment and the machinery and materials required to produce them. As large overseas orders continue to raise factory utilisation, corporate investment and export earnings, the region’s economies are enjoying strong growth across national income, tax revenues and financial activity.
The sheer scale of Western investment helps explain this strength. State Street Investment Management estimated that Asian economies collectively produced around 72 percent of the world’s semiconductors and 95 percent of the most advanced chips used in AI accelerators. “Asia anchors AI through hardware; the West scales through capital,” the Boston-based financial-services firm explained in a June 4 report.
With American hyperscalers committing hundreds of billions of dollars to data centres and computing capacity, much of that capital expenditure eventually becomes revenue for Asian foundries, memory producers, component makers and equipment suppliers. “The Asia-Pacific region—led by Taiwan, South Korea, Japan, and China—has become the epicentre of global semiconductor manufacturing, which is the foundation of modern AI technologies,” State Street also noted.
Through advanced semiconductor fabrication and AI-server manufacturing, Taiwan occupies arguably the most valuable part of this chain. The island’s June export data recorded demand growth from the United States, China, Southeast Asia and Europe. With ICT products and electronic components accounting for almost 79 percent of monthly exports, however, any slowdown in AI-infrastructure investment could rapidly and significantly dent Taiwanese industrial production, corporate earnings and its wider trade balance.
South Korea’s role is equally important, with Samsung Electronics and SK Hynix commanding dominant positions in memory chips, particularly the high-bandwidth memory that is required by AI systems. Exports rose by 70.9 percent year-on-year in June to a record $102.25 billion, pushing the monthly total above $100 billion for the first time. Semiconductor shipments almost tripled to $44.82 billion, equivalent to nearly 44 percent of all exports, while computer-product exports more than quadrupled to $5.41 billion. Together, those two categories generated almost half of outbound shipments, demonstrating how heavily the record result depended on the global AI-infrastructure cycle.
Japan, meanwhile, benefits from a broader range of upstream industrial capabilities, especially as a key supplier of semiconductor-manufacturing equipment, specialty chemicals, precision components, cooling systems and electrical machinery. The Bank of Japan (BoJ) also reported that AI-related demand is reaching direct exporters, regional suppliers and subcontractors, including producers of the air-conditioning systems used in data centres. While Japan lacks Taiwan’s dominance in advanced chip fabrication, its deep industrial base nonetheless allows the economy to capture substantial value from each new round of semiconductor and computing-infrastructure investment.
China occupies a more complex position as a component importer, manufacturing centre and increasingly important exporter of AI-related hardware. The economic superpower’s exports rose by 17.6 percent during the first half of 2026 and accelerated to 27 percent year-on-year in June. Trade in electronic components, computer parts and other computing equipment also increased by almost 57 percent during the first six months to 5.1 trillion yuan. “With the rapid growth of AI, our imports and exports of products in this field are robust,” Wang Jun, vice minister of the General Administration of Customs, observed when releasing the figures.
Imports of integrated circuits and data-processing equipment also rose sharply, reflecting China’s central position within the region’s production network. Components manufactured in Taiwan, South Korea or Japan can be imported into China, incorporated into computers, servers or other electronic systems and subsequently exported as higher-value products. The process thus demonstrates how the regional AI boom represents a highly integrated industrial cycle, instead of a series of unrelated national export successes.
China’s recent figures also exemplify how the country’s undeniable external strength is masking distinct economic weakness at home.
China’s recent figures also exemplify how the country’s undeniable external strength is masking distinct economic weakness at home. Although industrial output increased by 5.3 percent in June, for example, retail sales rose by only 1 percent, and property investment continued to contract sharply. And while external demand did help exports expand considerably during the month, the economy still recorded its slowest quarterly growth in three and a half years. AI-related trade, therefore, is proving hugely important for supporting production and national income despite the persistence of cautious household consumption and a prolonged property downturn that continues to weigh on domestic growth.
As for Hong Kong, commerce and finance are crucial contributory sectors in an economy that is prioritising re-exporting over domestic manufacturing. The jurisdiction’s goods exports rose by 53.4 percent year-on-year in June, led by a 57.2-percent increase in electrical machinery and parts, a 93.2-percent rise in office and automatic data-processing machines and a 69.9-percent gain in telecommunications equipment. Much of this activity moves through the territory’s ports, logistics networks, customs services and financial system, allowing Hong Kong to capture value as a distribution, trade-finance and cross-border-payment centre within the regional supply chain.
The region’s economic significance extends well beyond trade statistics. Moody’s Analytics recently noted that by supporting data-centre construction, semiconductor production and exports from Asia, the boom in AI demand has helped the global economy avoid a more pronounced slowdown. It is also improving productivity within the region—manufacturers are using machine learning for quality control, predictive maintenance, production scheduling and semiconductor-yield optimisation, enabling factories to increase output and reduce downtime without proportionate increases in labour or physical capacity.
Financial institutions are already capturing some of the upside of this growth story. HSBC, for example, identified Taiwan as one of its fastest-growing markets globally, citing the semiconductor and broader AI-investment boom, expanding cross-border trade and rising wealth creation. The UK bank’s Taiwan subsidiary and Taipei branch also generated a combined pre-tax profit of around NT$4 billion (US$127 million) during the first quarter. “The advantage that Taiwan has is a growth story linked to the semiconductor and broader AI industries, strong underlying corporate performance, and wealth creation,” Surendra Rosha, HSBC’s co-chief executive for Asia and the Middle East, told the Taipei Times on June 2.
The same sectoral concentration that supports bank earnings during the upswing, however, can also produce correlated losses when the cycle heads south. Semiconductor companies, suppliers, retail investors and national equity markets are increasingly exposed to the same source of demand, a reality that is now particularly visible in South Korea, where Samsung and SK Hynix account for more than half of the KOSPI (Korea Composite Stock Price Index). Margin lending reached a record 38.6 trillion won in June, while leveraged funds linked to individual chipmakers have grown large enough for mandatory rebalancing trades to amplify movements in the underlying shares.
The benefits stemming from this regional growth model are also proving uneven. Semiconductor fabrication and AI-server production are highly capital-intensive and employ a limited share of the workforce. Taiwan’s economy and equity market have surged, but wages across much of traditional manufacturing have failed to keep pace. South Korean petrochemical, steel, battery and automotive suppliers continue to face weaker demand and intense Chinese competition. As Sang-Ha Yoon of the Korea Institute for International Economic Policy observed, Korea is “doing well in a very narrow way”.
This divide weakens the usual transmission from exports to household consumption. Higher profits accrue first to major technology companies, specialist employees and shareholders, while workers in slower industries face stagnant real wages and rising living costs. Taiwan’s central bank has warned that excessive reliance on one group or sector could weaken the economy, with lower- and middle-income households particularly exposed to inflation and debt pressures. Exceptional gross domestic product (GDP) and export figures, therefore, can mask underlying economic weaknesses, such as subdued consumer spending and widening economic disparities across the population.