Taiwan’s overall trade surplus could reach USD 205.4 billion this year, according to the central bank, as the island emerges as a major global manufacturing hub for artificial intelligence hardware.

The projected surplus would be 4.2 times the USD 49.2 billion surplus recorded in 2018, when the US-China tariff dispute began. The central bank linked the expansion of Taiwan’s AI hardware manufacturing sector to US efforts to build supply chains without China.

The US trade deficit is expected to exceed USD 1.1 trillion, with Taiwan projected to become its third-largest source at USD 219.2 billion. Vietnam and Mexico are expected to rank ahead of Taiwan at USD 238 billion and USD 221 billion respectively, while China is projected to rank fourth at USD 156.4 billion.

The central bank said Taiwan is becoming an important manufacturing node in the global division of labor. Exports of servers to the US are supporting development in semiconductor manufacturing and advanced chip packaging technology.

Taiwan imports memory chips from South Korea and wafer fabrication equipment and materials from Japan. Taiwan outsources medium- and low-technology manufacturing to ASEAN member states, placing it at the center of global AI supply chains.

Taiwan’s electronics industry is also shifting away from the earlier model of manufacturing goods in China for sale in the US.

Taiwan now predominantly manufactures high-value-added, tariffed, technologically advanced, and cybersecurity-sensitive products. Medium- and low-tech products are assembled in the US or ASEAN countries.

3 percentage points from 2018. 7 percentage points.

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