Taiwan expands AI influence through Physical AI push and trade dominance

Taiwan is expanding its influence in the global artificial intelligence sector through both technological integration and trade dominance. In Silicon Valley, Taiwanese semiconductor companies and AI startups are collaborating with U.S. technology leaders to advance ‘Physical AI’—the transition of AI models from digital simulations into real-world applications such as factories and machinery.

Events held during Taiwan Tech Week, including discussions involving Phison Electronics and Applied Materials, highlighted the growing need for infrastructure in the Physical AI stack. Companies are focusing on memory solutions, semiconductor security, and post-quantum cryptography to support mission-critical environments.

Economically, Taiwan is emerging as a primary proxy for global AI capital spending. While South Korea maintains a larger absolute export base, AI-related goods account for approximately 80% of Taiwan’s exports, compared to over 40% in South Korea. This high concentration has contributed to significant economic shifts, including Taiwan’s real GDP growth of 8.63% in 2025 and its per-capita GDP surpassing South Korea’s for the first time in 22 years.