The island of more than 23 million people is a global powerhouse in the manufacturing of semiconductor chips, which power AI, and are found in everything from smartphones to electric vehicles.
Gross domestic product for Taiwan expanded by 8.6% last year compared with 5.3% in 2024, faster than the government’s own forecast for 7.4% growth.
Economic growth set a cracking pace in the fourth quarter, growing 12.7% from a year ago.
“Due to stronger-than-expected external demand driven by emerging technologies, such as artificial intelligence, real exports of goods and services grew by 38.82%” in the fourth quarter from a year ago, the Directorate-General of Budget, Accounting and Statistics said in a statement.
Imports also rose by 24.6% year on year for the three-month period, the statement said.
The rate of expansion is “likely to slow in 2026, but Taiwan is still set to record another year of very strong growth,” Capital Economics senior Asia economist Gareth Leather said in a note.
Taiwan’s economic growth is expected to slow to 3.5% this year, according to an earlier official forecast.
Taiwanese tech manufacturers have been massive beneficiaries of the AI revolution as US tech giants, including Nvidia and Apple, pour billions of dollars into semiconductors, servers and data centres.
In 2025, exports rose nearly 35% from a year earlier to a record US$640.75 billion, previous data showed, driven by a nearly 90% increase in ICT shipments ranging from AI and high-performance computing to cloud-related products.
“There has been a huge demand for servers and graphics processing units produced in Taiwan over the past two years driven by the global AI wave,” said Lien Ko-hsiung, an analyst at the Taiwan Institute of Economic Research.
The United States was the biggest export destination last year, accounting for nearly 31% of Taiwan’s total shipments.
Last year’s GDP growth rate was the fastest since the 10.3% in 2010, when China was Taiwan’s biggest export destination.
For the past decade Taiwan has sought to reduce its reliance on the Chinese market as cross-strait relations deteriorated.
Beijing claims Taiwan is part of its territory and has ramped up military, political and economic pressure on the self-ruled island.