AI demand and pre-tariff rush lift Taiwan's exports in May

Taiwan’s exports climbed to a record in May due to increased demand for artificial intelligence. The surge is also linked to a jump in customer orders placed ahead of U.S. tariffs, which could take effect next month after a suspension period expires.

The finance ministry reported that the country’s exports rose 38.6% from the same month a year ago – the fastest pace in almost 15 years – to $51.74%. According to the ministry, the figure was also a record high, and for the first time, the value of Taiwan’s exports exceeded $50 billion.

Taiwan braces for U.S. tariffs as exports rise

The surge, the 19th consecutive monthly increase, was higher than the 25% expected by economists in a Reuters poll and surpassed April’s 29.9%. Taiwan firms, including TSMC, the world’s largest contract chipmaker, are major suppliers to Nvidia, Apple, and other tech giants.

The ministry acknowledged that May exports benefited from continued strong AI demand and customers bringing forward orders to hedge against the possibility of increased U.S. tariffs.

U.S. President Donald Trump had previously imposed a 32% import levy on goods from Taiwan, but he later announced a 90-day pause in April to allow for trade negotiations. The ministry also believes that while AI and other new technologies should continue to boost its exports, the uncertainty surrounding the U.S. tariffs and geopolitical risks could threaten the global economic outlook. 

“The overall growth of exports was impressive, but I would caution that a lot of it is because of export frontloading as the U.S. may still apply tariffs on chips and exempted electronic products. We are bound to see a slowdown later in the year.”

-Michelle Lam, Greater China Economist at Societe Generale SA.

The ministry expects exports for June to increase between 15% and 25% year-on-year. Last month, the country’s exports to the U.S. surged 87.4% year-on-year to $15.52 billion, versus a surge in April.

Taiwan’s total exports of electronic components inched up by 28.4% in May of the year to $17.2 billion, with semiconductor exports up 30.1%. According to the country’s finance ministry, imports rose 25% to $29.13 billion, lower than economists’ predictions of 30.2%.

Head of Asia research at Australia & New Zealand Banking Group, Khoon Goh, warned that the big export figures could put more pressure on the Taiwan dollar to strengthen if exporters were to convert their income.

Taiwan’s president seems optimistic about trade deals with the  U.S.

In a speech that marked Taiwanese President Lai Ching-te’s first year as president, he struck an accommodating tone despite the tariff pressure. He said trade tensions between the U.S. and Taiwan were just “frictions between friends” in a show of optimism as negotiations near the deadline. 

The President maintained that the U.S. and Taiwan have long cooperated and encouraged each other to grow. He believes there are bound to be frictions between allies, which they can eventually reconcile.

Ching-te also backed increased investments by Taiwanese firms in the U.S. He said he would continue to encourage foreign investment in the country, citing an announcement by U.S. tech company Nvidia about opening a new office in northern Taipei.

The tech company’s Taiwan-born CEO Jensen Huang also acknowledged that the firm would build an artificial intelligence supercomputer on the island in partnership with TSMC, tech company Foxconn, and the Taiwanese government.

In March, TSMC responded to Trump’s tariff threats by pledging a new $100 billion investment in the U.S., adding to earlier commitments to invest more than $65 billion in three factories in Arizona, one of which began production late last year.

Despite the impact of U.S. tariffs, TSMC’s chairman and chief executive, CC Wei, said the artificial intelligence business would remain strong. He also argued that the company expects record earnings this year as it increases semiconductor production capacity to meet soaring demand for AI technology.

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