Taiwan economist warns against forcing chipmakers to share profits, backs tax-based redistribution

2 million won (about $1,300) vs. 100 million won.

The gap between the average monthly salary of a Taiwanese worker and that of a semiconductor industry employee has surpassed 50 times.

Taiwan's economy is growing at its fastest pace in history on the back of a semiconductor boom, but the economic divide between those inside and outside the industry continues to widen.

Taiwan's total fertility rate last year stood at 0.695 — lower than South Korea's and the lowest in the world. According to the World Inequality Lab, the top 10 percent of income earners account for 48 percent of total income, while the bottom 50 percent receive just 12 percent — a concentration of wealth more severe than in the United States.

Wu Da-ren, a professor and lead researcher at the Taiwan Economic Development Research Center of National Central University, met with The Herald Business at the university in Taipei on Tuesday and said South Korea is in a better position than Taiwan. "Unlike Taiwan, South Korea has not staked the nation's fate on a single industry like semiconductors," he said. "It is backed by a diverse range of globally competitive industries, including steel, automobiles and shipbuilding." Still, he cautioned that "if South Korea also fails to achieve balanced development, the wealth gap will only worsen."

The AI boom has sent Taiwan's economy surging. In the first quarter of this year, the country posted a growth rate of 13.69 percent — the highest quarterly figure in 39 years since 1987, and well above South Korea's 3.6 percent and China's 5.0 percent. Last year's annual growth rate of 8.63 percent topped India (7.2 percent), China (5.0 percent) and the United States (2.2 percent).

Taiwan's per capita GDP already surpassed South Korea's last year. Taiwan's statistics agency projects per capita GDP at $40,921 this year, set to cross the $40,000 threshold ahead of South Korea's estimated $37,932. Stock markets are also booming. TSMC's record earnings have pushed Taiwan's Taiex index up 485 points so far this year, lifting the country's total market capitalization past Canada and India to fifth in the world.

But the shadow behind the boom is long. With the semiconductor industry — led by TSMC — accounting for more than 20 percent of Taiwan's GDP, the gains have been concentrated almost entirely within that sector. The average salary across all industries is roughly 46,000 New Taiwan dollars (about 2 million won), yet 70 percent of Taiwan's population earns below that average. The median wage is just 38,000 New Taiwan dollars (about 1.88 million won). Average wage growth in 2025 was 3.1 percent in practice — far short of the 8.7 percent economic growth rate.

"Taiwan's total employed population is about 12 million, of whom roughly 1 million work in the IT and electronics sector — and only about 300,000 of those are in the semiconductor industry," Wu said. "Less than one-tenth of the workforce is benefiting from the semiconductor boom."

He added that industries outside semiconductors — including metals and petrochemicals — are actually contracting under the weight of US reciprocal tariffs. "On top of that, Taiwan must invest $500 billion (about 775 trillion won) in the United States — far more than South Korea's $350 billion (about 500 trillion won)," he said. "In this environment, other industries are seeing little or no growth, or are even declining, and that is deepening the polarization."

Some analysts say the structural imbalance stems from the government's near-exclusive focus on supporting high-tech export industries such as semiconductors, leaving the rest of the economy increasingly uncompetitive. The phenomenon has even spawned a new term: "Taiwan disease."

A new term has emerged among young Taiwanese: "beggar Superman" — referring to the practice of buying only heavily discounted, near-expiry food at convenience stores. Taipei's median house-price-to-income ratio stands at 15.41 times, surpassing both Hong Kong (14.4 times) and Seoul (13.9 times). On a monthly salary of less than 2 million won, with roughly 700,000 won going to housing costs, there is almost nothing left to spend or save. That is the backdrop to Taiwan's world-low fertility rate of 0.695.

According to Taiwan's job portal Yes123, about 40.2 percent of Taiwanese workers under 39 said their expenses exceed their income. Some 22.4 percent said they have no savings at all, and 72.7 percent said they are in debt. More strikingly, 54.9 percent said they consider themselves failures in life.

A Yes123 official said young Taiwanese "are worried about becoming parasites or going broke," adding that "the Taiwan government needs to attract foreign investment and encourage companies to return home."

Wu said the debate over wealth redistribution is necessary. "To address the widening wealth gap, the government is collecting more income tax from electronics industry workers and using part of it to provide subsidies to economically vulnerable groups," he said. The Taiwan government has also stepped in on housing costs, offering monthly support of 5,000 to 10,000 New Taiwan dollars (about 250,000 to 500,000 won) depending on income level.

A birth subsidy policy is also set to be introduced to address the low birth rate. Wu explained the plan: parents receive 5,000 New Taiwan dollars (about 250,000 won) per month per child from birth through age 6, regardless of how many children they have. From age 7 to 18, they receive 2,500 New Taiwan dollars (about 120,000 won) per month directly, with the remainder deposited by the government into a dedicated savings account. By the time a child turns 18, the government will have accumulated a seed fund of roughly 400,000 New Taiwan dollars (about 17 million won).

Wu cautioned, however, that viewing semiconductors as a "public good" in the redistribution debate is dangerous. "By the nature of the semiconductor industry, companies bore all the devastating losses and risks during downturns on their own," he said. "Demanding that they forcibly return profits to society just because we are now in an upcycle is a contradiction that violates market principles." The right approach, he said, is for the government to collect revenue through legitimate tax systems — such as corporate and income taxes — and redistribute it appropriately as welfare funding.

Wu said South Korea's strength lies in having a solid manufacturing base beyond semiconductors. "If an AI bubble burst becomes reality, Taiwan has no other industry to replace it or absorb the shock," he said. "But South Korea still has strong pillar industries with global competitiveness, such as shipbuilding and automobiles."

He advised that when South Korea designs industrial policy, it must treat "portfolio balance" as the top priority. "The nation must not stake everything on a single technology or one industry," he said. "It is essential to secure competitiveness across a diverse range of sectors."

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