Asia’s AI chip boom fuels North Asia’s economic rebound
Taiwan’s first-quarter real GDP growth has surged to 11.8% as US hyperscalers’ demand for AI chips drives record profits at North Asia’s chipmakers, FactSet data shows.
Source: Free Malaysia Today · July 21, 2026 at 8:31 AM · AI-assisted report
Single-source
KUALA LUMPUR, 21 JULY 2026 —
Taiwan’s first-quarter real GDP growth has surged to 11.8% as US hyperscalers’ demand for AI chips drives record profits at North Asia’s chipmakers, FactSet data shows.
Market Impact
South Korea’s SK Hynix and Samsung Electronics now tie employee bonuses directly to operating profit, a shift that has swollen household incomes and boosted consumption. SK Hynix allocates 10% of operating profit to bonuses with no cap, a formula agreed in September that last year gave its 35,000 staff the equivalent of 29 months of base pay.
Samsung’s chip division will pay 10.5% of profit as stock awards starting this year, scrapping a 50% bonus cap after 63,000 workers voted in favour.
Taiwan’s TSMC approved a bonus pool of about T$206 billion for its roughly 65,000 employees in 2025, averaging just over T$2.6 million per worker, up from roughly T$2 million in 2024, according to the company. Its CEO last week also vowed a more than 30% incentive bump.
Retail sales growth in Taiwan has climbed to 6%-8% between February and April, compared with an average of 2.1% in the previous 10 years, according to FactSet. South Korea’s retail sales averaged 4% in the first four months of 2026, up from 0.3% in 2025 and a ten-year average of 1.4%.
Corporate earnings upgrades in both markets through the end of 2025 were driven almost entirely by the technology sector, FactSet consensus estimates show. Since November 2025, 2026 consensus earnings-per-share have been raised by 67% for Korean financials, 11% for Taiwanese financials and 8% for Korean retail.
Equity wealth effects are most pronounced in Taiwan, where individuals held 20% of their wealth in stocks in 2024, compared with less than 6% for the average South Korean. Korean individuals bought US$33.8 billion in equities during the first five months of 2026, reversing a US$13.5 billion net sale in 2025 and a US$782 million purchase in 2024, according to Korea Exchange data.
The AI-led rebound has cushioned both economies against surging energy import costs from the Iran conflict. FactSet data shows the rise in export prices for memory and semiconductors has more than offset higher oil and gas prices, supporting currencies and limiting the need for interest rate hikes.
Seoul’s tax revenue rose over 16% year-on-year in the first quarter of 2026 after an 11% increase in 2025; the government acknowledged the role of soaring semiconductor bonuses in boosting income tax receipts.
Taiwan’s tax revenue grew only 0.7% in 2025, dragged down by a weak property market, but individual income tax rose 5.4% above trend. The Directorate-General of Budget, Accounting and Statistics forecasts revenue growth of 6%-8% in 2026.
Investors still question whether AI spending can be monetised at scale, a risk that could trigger a slowdown in infrastructure investment and shrink bonuses. A senior South Korean policy adviser this month proposed a “citizen dividend” funded by AI infrastructure companies’ excess profits, a plan that briefly roiled markets. Labour disputes over bonus formulas, such as the recent Samsung negotiations, could unsettle shareholders.
For now, the AI tide is lifting an increasingly broad swath of North Asia’s economy, creating a virtuous cycle of higher wages, stronger consumption and rising tax receipts.