Taiwan's stock market total market capitalization rose to $4.95 trillion USD as of May 25, surpassing India's $4.92 trillion to become the world's fifth largest stock market by value [1]. The surge was mainly fueled by Taiwan Semiconductor Manufacturing Company (TSMC), whose stock price jumped 49% this year and now represents about 42% of the Taiwan Weighted Index [1].
Taiwan's market has benefited strongly from the AI-driven demand for semiconductor hardware, especially memory chips and chip manufacturing. Taiwan, along with South Korea, has become one of the main beneficiaries of the ongoing AI investment cycle [2, 1]. South Korea's Kospi index surged rapidly from 7,000 to a record 8,000 points in just seven trading sessions in May, led by major memory chip makers Samsung Electronics and SK Hynix responding to AI infrastructure needs [2].
Nvidia CEO Jensen Huang announced plans to increase the company's annual investment in Taiwan to $150 billion USD, up from the current roughly $100 billion, with a new headquarters expected to be completed by 2030 and employing 4,000 people [3, 4]. TSMC Chairman Wei Zhejia expressed strong optimism about AI-driven growth, projecting annual revenue growth above 30% USD this year and continuous employee bonuses exceeding 30% [5, 6]. Wei also confirmed significant capacity constraints, prompting TSMC to expand production both in Taiwan and Japan to meet demand from U.S. customers [6]. He dismissed competitor Samsung's claims of catching up to TSMC soon as unrealistic, calling it "a dream" [6].
Taiwan regulators recently raised the investment limits for domestic funds in a single stock on the Taiwan Stock Exchange from 10% to 25%, potentially bringing an estimated $6 billion USD in new inflows, mainly benefiting TSMC [1]. Nvidia CEO Huang emphasized the importance of paying employees well amid the AI boom, echoing Samsung's recent agreement to pay $400,000 bonuses to engineers to resolve labor issues [7].
The South Korean market rally has raised concerns about sustainability, as foreign funds have been net sellers recently [2]. Fidelity International portfolio manager Ian Samson said: "To believe there is a bubble, you have to believe the amount of money the AI giants are spending is unsustainable. Essentially all their free cash flow, and more, is now pouring into the arms race to build out AI infrastructure. For now, there is good visibility that the end is not imminent." However, some market participants, including Broadcom CEO Hock Tan, noted softer-than-expected Q3 guidance that disappointed investors after strong Q2 AI semiconductor revenue growth of 143% [8, 9].
Broadcom reported a 48% growth in Q2 revenue but its Q3 AI revenue guidance sparked a stock price drop amid broader tech selloff concerns linked to a possible AI bubble and geopolitical tensions [8, 9]. Huang and Wei's remarks highlighted the intense competition and tight capacity in the semiconductor sector amid rising AI chip demand.
Taiwan’s stock market is now firmly positioned as a global leader in AI-related semiconductor growth. Nvidia's new headquarters construction is planned to start by the end of 2026 and complete by 2030 [3, 4], marking a key milestone in the region’s industrial expansion.
