Taiwanese firms' China investment returns hit record high on AI boom

The AI boom has driven a surge in profits for Taiwanese firms, revealing deep shifts in the global semiconductor supply chain. In the first half of 2026, Taiwanese listed companies earned a record 2899.5 billion NT dollars from investments in China, up 11.12% year-on-year. This reflects strong demand for high-performance computing driving upstream sectors such as chip design, manufacturing, and packaging. Particularly in AI training chips, memory, and power devices, orders have surged. However, geopolitical tensions persist, with rising compliance costs and supply chain risks under the U.S.-China tech decoupling trend. Should further U.S. export controls tighten, Taiwanese firms may pivot investments toward Southeast Asia or Hong Kong, China. In the short term, the mainland remains the core profit driver for Taiwanese semiconductor firms, but long-term diversification of regional supply chains will be critical. Over the next 12 months, if AI adoption continues to accelerate, Taiwanese companies are expected to increase capital allocation in advanced process nodes and AI-specific chips to maintain their global industry leadership.