Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) helps Taiwan surpass South Korea in wealth for the first time in 20 years, and is expected to lead in per capita GDP by 2025.

This year, the total wealth of China's Taiwan province is expected to surpass South Korea for the first time in over twenty years, marking a reshaping of the Asian economic landscape driven by Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US). According to the latest forecast on Thursday, Taiwan province's GDP growth rate is expected to reach 4.55% by 2025, higher than the 4.45% estimated by the statistical department in August. With this growth trajectory, Taiwan province is expected to surpass South Korea in per capita GDP by 2025, a year ahead of the IMF's forecast in April this year - a key indicator of living standards. Currently, Taiwan province's per capita GDP is estimated at around $38,000, only half of Singapore's level, but ahead of Japan and closing the gap with South Korea. Behind this transformation is the strong driving force of the artificial intelligence consumer boom on Taiwan province's semiconductor industry. During the pandemic, the global chip shortage boosted the position of Taiwanese companies, with leaders from Europe and America to corporate executives rushing to purchase semiconductors to sustain economic operations. After the emergence of ChatGPT, companies such as Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR and Foxconn experienced explosive growth, contracting the assembly of the majority of AI critical chips and servers globally. In contrast, South Korea, whose economic pillar Samsung Electronics accounts for 11% of the Korean economy, is showing signs of decline in the advanced process competition. South Korea's economy grew by less than 1% year-on-year in the second quarter, with an estimated full-year growth rate of 0.9%. The Bank of Korea Governor Lee Chong-yeong has repeatedly warned that structural issues such as low birth rates and aging have dragged the potential growth rate into the 1% range. Bloomberg economic research points out that South Korea's industry has a wide span, with traditional sectors such as petrochemicals facing a downturn, while Taiwan province has a high concentration of technology and benefits more from the AI boom. South Korea, on the other hand, is plagued by the downturn of traditional industries like petrochemicals and a deteriorating population structure. In August of this year, Taiwan province's exports surpassed South Korea for the first time - a milestone of great significance, as South Korea's population and overall GDP size are more than twice that of Taiwan province. Exporters rushing to exchange rate settlement, combined with market speculation that the authorities are willing to let the local currency appreciate in exchange for leverage in US trade negotiations, have pushed the New Taiwan dollar to appreciate by about 9% against the US dollar this year, while the South Korean won has only risen by 6% during the same period, further widening the gap in per capita GDP between the two sides. However, Taiwan province's economy also faces hidden risks. Over-reliance on a single industry - especially as the share of exports to the US continues to expand in Taiwan province - may turn its advantages into vulnerabilities, especially in the context of the risks from GEO Group Inc in the Taiwan Strait and tensions with China. Chen Wuud, chief economist at Taipei Yuanta Securities, pointed out that limited resources make it difficult for Taiwan province to diversify its industries, and there is a need to promote the transformation of traditional industries into high-tech supply chain links. At the same time, the government needs to explore a mechanism for redistributing the profits of tech companies to balance development.