The rise of Taiwan Semiconductor Manufacturing Company boosts Taiwan's wealth, surpassing South Korea for the first time in 20 years, with per capita GDP expected to lead in 2025

According to the Zhitong Finance APP, this year, the total wealth of Taiwan Province is expected to surpass that of South Korea for the first time in over twenty years, marking a significant shift in the Asian economic landscape driven by the rise of Taiwan Semiconductor Manufacturing Company (TSMC). The latest forecast on Thursday predicts that Taiwan's GDP growth rate will reach 4.55% in 2025, up from the August estimate of 4.45% by the statistical department. Following this growth trajectory, Taiwan is expected to exceed South Korea's per capita GDP in 2025, one year earlier than the IMF's prediction made in April this year. This core indicator of living standards currently estimates Taiwan's per capita GDP at around $38,000, which, while only half of Singapore's level, surpasses Japan and is rapidly closing the gap with South Korea. Figure 1 Behind this transformation is the strong drive of the artificial intelligence consumption boom on Taiwan's semiconductor industry. The global chip shortage during the pandemic elevated the status of Taiwanese companies, as political leaders and corporate executives from Europe and the United States scrambled to procure semiconductors to maintain economic operations. Following the emergence of ChatGPT, companies like TSMC and Foxconn experienced explosive growth, as they secured contracts for the assembly of most of the world's key AI chips and servers. In contrast, South Korea's economic pillar, Samsung Electronics, which accounts for 11% of the South Korean economy, is showing signs of decline in the competition for advanced processes. South Korea's economy grew by less than 1% year-on-year in the second quarter, with an expected annual growth rate of 0.9%. Bank of Korea Governor Lee Chang-yong has repeatedly warned that structural issues such as low birth rates and aging populations have dragged the potential growth rate into the 1% range. Figure 2 Bloomberg Economics points out that South Korea's industries are diverse, with traditional sectors like petrochemicals in decline, while Taiwan's technology sector is highly concentrated and benefits more from the AI boom. South Korea, on the other hand, is constrained by the sluggishness of traditional industries like petrochemicals and deteriorating demographic structures. In August of this year, Taiwan's export value surpassed that of South Korea for the first time—this milestone is particularly significant, given that South Korea's population and overall GDP scale are more than twice that of Taiwan. Exporters rushed to convert currencies, coupled with market speculation that authorities are willing to allow the local currency to appreciate in exchange for leverage in trade negotiations with the U.S., has driven the New Taiwan Dollar to appreciate about 9% against the U.S. dollar this year, while the South Korean won has only risen 6% during the same period, further widening the per capita GDP gap between the two sides. Figure 3 However, Taiwan's economy also faces hidden concerns. An excessive reliance on a single industry—especially as the share of exports to the U.S. continues to expand—could turn advantages into vulnerabilities, particularly against the backdrop of geopolitical risks in the Taiwan Strait and tense relations with China Taipei Yuanta Securities Chief Economist Chen Wuzi pointed out that limited resources make it difficult for Taiwan's industries to diversify, and it is necessary to promote the transformation of traditional industries into high-tech supply chain segments. At the same time, the government needs to explore a mechanism for the redistribution of technology companies' profits to balance development