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Taiwan—Beyond Tech

Read Portfolio Manager Winnie Chwang’s insights after a recent research trip to Taiwan.

  • 07/22/2025

Taiwan has been known as the heart of Asia's artificial intelligence (AI) capabilities given how closely integrated the country's tech supply chain has been to many of the global AI giants we know. Taiwan’s advanced level of engineering, precision component manufacturing and cost competitiveness have been well-recognized by many global peers.

Despite Taiwan's well-known tech prowess, a recent research trip took me off the usual path to visit mostly non-tech companies.

My key takeaways:

  • Non-tech industries are increasingly benefiting from Taiwan’s rise in the technology space
  • We’re positive on long-term prospects, but valuations are rich, making entry points and positioning important

 

Take Taiwanese banks. They are growing as businesses expand capital activity across central and southern parts of Taiwan. Economic activity in the country is expanding beyond the traditionally dominant north, (led by Taipei historically), with rising housing prices outside Taipei, which has benefitted the mortgage books of banks. Overseas, Taiwanese banks are also growing as more local businesses expand internationally and prefer familiar funding. Additionally, banks have benefitted from fund flows supported by the establishment of more Taiwanese ETF funds and have been preferred holdings as they have offered both high dividend yields and improving earnings growth. Taiwan now ranks among the top three emerging ETF markets in Asia1.

Local retailers are also enjoying the growing economic activity in Taiwan. One retailer shared that viable store locations are now increasing as Taiwanese tech giants expand their presence locally. Taiwan retail market continues to be domestically focused with manageable levels of competition, boding positively for growth resilience in the space.

At Touch Taiwan, a local trade show, I saw firsthand the tech buzz with steady foot traffic even on a Friday afternoon. Booths featured next generation large screen displays (LED and digital ink), foldable e-readers and touch solutions used in up-and-coming robotics and automations. Many of the solutions presented emphasized energy efficiencies and environmental friendliness.

In summary, Taiwan remains well positioned in its spot in the AI manufacturing supply chain and should continue to benefit from such secular developments. Increasingly, non-tech sectors also benefit from positive tech developments in the country. However, the country’s valuations are relatively richer in Asia after years of outperformance, and may result in more volatility in stocks if global AI CapEx fails to meet expectations. We remain positive on longer term developments but are mindful that entry points and positioning may need to be adjusted in light of AI and technology developments ahead.

Winnie Chwang
Portfolio Manager

1Source: Taiwan Stock Exchange

 

 

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