HSBC economist: Taiwan's semiconductor exports offset energy impact, AI boom to sustain growth

HSBC Group Global Research Chief Asia Economist and Joint Head of Asia Frederic Neumann (Reporter Wu Hsin-tien photo).

(Reporter Wu Hsin-tien/Taipei) HSBC Group Global Research Chief Asia Economist and Joint Head of Asia Frederic Neumann stated today that Taiwan, with its strong semiconductor export performance, has effectively offset the impact of energy shocks.

Neumann believes the AI industry will continue to boom. Based on the capital expenditure plans of four major technology companies from 2026 to 2028, Taiwan's export momentum is expected to remain strong for the next two to three years. Regarding the US tariff issue, he analyzed that semiconductors are less affected by tariffs, and the probability of tariffs being imposed is not high. Even if tariffs are imposed, the costs can be more easily passed on to US customers.

However, export performance will diverge. Compared to semiconductors, non-semiconductor industries are more susceptible to the impact of tariff policies. Overall, Taiwan's annual export value is expected to grow by about $60 billion between 2025 and 2030. Due to significant growth in semiconductor exports, this estimate may even be underestimated. Taiwan's future export scale has the potential to surpass the Netherlands and South Korea, approaching the level of Australia.

In terms of the global situation, although the economic performance at the beginning of the year has been positive, the energy shock caused by the conflict in the Middle East still poses challenges to the global economy, hindering growth in Europe and parts of Asia. In contrast, Taiwan and South Korea are less directly affected by the energy crisis.

Neumann pointed out that the Asian economy is currently in a state of mixed pros and cons: AI development is beneficial to Taiwan and South Korea, but energy volatility and US tariff policies bring risks. He predicts that energy price fluctuations will persist for a longer period. Even if the Strait of Hormuz resumes passage, it will take about 6 months for Middle Eastern oil-producing countries to restart production, coupled with the demand for global buyers to replenish inventories, and low traffic volume due to navigation risks, high oil prices are expected to remain for about 12 months.

He stated that Asia relies on the Middle East for about 80% of its energy imports. In the past three years, energy imports have accounted for 7% of the GDP of Taiwan and South Korea. Despite the high cost of energy imports, Taiwan and South Korea have sufficient affordability due to strong semiconductor exports and rising prices. In contrast, Japan is in a more disadvantageous position.

Neumann stated that the depreciation pressure on the Japanese Yen remains high. Although the Bank of Japan has policy responses, it is still challenging to raise interest rates due to the energy crisis and weak exports. However, he expects the Bank of Japan to raise interest rates multiple times this month and within the year. If the exchange rate of the Japanese Yen against the US dollar can rebound to around 150, the pressure will be alleviated.

Neumann also discussed market concerns about an AI bubble. He emphasized that the current situation is different from the dot-com bubble of the past. Current corporate investments are mostly derived from actual profits rather than financing and borrowing, so the investment cycle is expected to last longer. The current challenges, in addition to tariffs and the energy crisis, also include high inflation pressure. The rebound in core CPI indicates that economic growth remains strong, but the accompanying inflation problem still needs close attention.

Get the pulse of the economy, click here to subscribe to the Liberty Finance YouTube channel