A.I. Riches Fuel Economic Divide in Asia’s Chip Powerhouses
"A.I. demand is driving stock market gains and booming exports in South Korea and Taiwan. But the rest of the economy is being left behind.
In South Korea and Taiwan, the world’s hunger for artificial intelligence has unleashed a boom unlike anything seen in years. The two economies are home to the small cluster of companies that produce the coveted chips A.I. cannot run without.
As exports climb to record highs and stock markets soar, the rush to cash in has reached a fever pitch. Seniors are opening brokerage accounts to funnel their savings into semiconductor stocks. On social media, young people question the point of their jobs, saying they could earn as much — or more — trading stocks.
Yet the windfall is masking a far bleaker picture across much of the rest of the economy. Industries outside chip making are struggling to navigate a turbulent landscape upended by energy and tariff shocks. Household debt and real estate prices continue to rise. Both currencies remain weak despite repeated government interventions to prop them up.
For both places, the skyrocketing growth springs from a narrow, highly specialized sector that employs only a sliver of the population. Everybody else is left scrambling to find a way in.
As investors pour money into chip stocks, chasing a share of the A.I. bonanza, they are amplifying the market’s wild swings. Korean stocks plunged 10 percent on Tuesday, setting off a global tech sell-off, before rising over 3 percent a day later.
Economists describe the phenomenon as a “K-shaped” divide, in which some industries and socioeconomic groups thrive while others stall or fall behind. Around the world, including in the United States, that divide has widened since the Covid-19 pandemic. Now, the A.I. boom threatens to make it even more expansive.
The enormous A.I. demand, Taiwan’s central bank cautioned in a statement this month, risks creating an economy in which “different groups or industries experience drastically different economic outcomes.”
“The wealthy thrive,” the bank said. “The low-income group struggles.”
Few places illustrate that split more clearly than the homelands of the world’s semiconductor giants, where companies including Samsung, SK Hynix and Taiwan Semiconductor Manufacturing Company are reaping record profits while much of the rest struggles.
South Korea’s benchmark KOSPI is the world’s best-performing major stock index since the start of the year. Samsung and SK Hynix have each crossed $1 trillion in market valuation. Samsung shares have more than doubled this year, while SK Hynix has tripled. The Bank of Korea raised its economic growth forecast after exports surged. In May, South Korea’s exports rose 53 percent from a year earlier to a record monthly high.
Samsung and SK Hynix dominate production of the memory chips that help A.I. systems store information. These systems require enormous amounts of high-bandwidth memory, making the two conglomerates indispensable to the global A.I. build-out and all but guaranteeing demand for their products.
“Because semiconductors now account for such an outsized share of Korea’s export value, the headline numbers look strong,” said Sang-Ha Yoon, executive director of the Korea Institute for International Economic Policy, a government-funded think tank.
But those figures conceal a growing divergence. Non-semiconductor exports — petrochemicals, steel, batteries, auto parts — are struggling with weak demand and intense competition from China.
“The same headline that reads ‘Korea is doing well’ also reads: ‘Korea is doing well in a very narrow way,’” Mr. Yoon said.
For workers outside the A.I. sector, Mr. Yoon continued, “the lived experience can be one of higher costs and stagnant real wages.”
As the benefits of the boom become increasingly concentrated, many South Koreans have started looking to the stock market to share in the gains.
Last month, stockbrokers reported that South Korean seniors were cashing in life insurance policies and retirement savings to buy chip stocks. Nearly 83 percent of net stock purchases by retail investors on the KOSPI this year have been Samsung or SK Hynix, according to Young Gon Lee, an analyst at Toss Securities.
“We are seeing capital that had remained in safer assets move into riskier assets in search of higher expected returns,” Mr. Lee said.
The enthusiasm extends to Taiwan, which last month overtook India to become the world’s fifth-largest equity market. TSMC, which manufactures the world’s most advanced A.I. chips, accounts for more than 40 percent of the value of Taiwan’s benchmark index and carries a market capitalization approaching $2 trillion.
The chip frenzy has helped propel Taiwan to some of the fastest growth rates in the world. The economy expanded nearly 13 percent in the fourth quarter of 2025 and almost 15 percent in the first three months of this year.
But that has not translated into broader wage gains, said Dachrahn Wu, executive director of an economic research center at National Central University in Taoyuan. Most Taiwanese workers are employed outside the tech sector and earn less than $1,500 a month, Mr. Wu said. The small group of high earners can save and invest. Most cannot.
Taiwan’s economic growth accrues mostly for the wealthy, such as TSMC shareholders, Mr. Wu said. “But the salaries of ordinary people haven’t grown much.”
Semiconductors and other technology products account for the vast majority of Taiwan’s exports, said Ma Tieying, a senior economist at DBS Bank in Singapore. Other export-dependent industries, meanwhile, have been hit hard by tariffs and weakening demand.
Taichung, a central Taiwanese city, was once a hub for machine tools, home to hundreds of thriving small businesses. But tariffs have transformed the industry, said Ian Chang, the second-generation general manager of Innovator Machinery Company, which makes woodworking machinery.
Many companies have gone out of business, and others have put day laborers on unpaid leave — widening the gap between workers in traditional manufacturing and those with steady jobs in the technology sector.
Mark Ke has run his family’s textile manufacturing business, Ecomax Textile Company, in nearby Changhua, for nearly five decades. The company pioneered the use of plastic bottles and other recycled items to make fabric, supplying international brands including the British retailer Marks & Spencer and producing material used in the balls for the 2014 FIFA World Cup.
Since then, however, textile manufacturers have faced growing competition from rivals in China and Southeast Asia. Rather than shoring up the sector, the government provided incentives like tax breaks and infrastructure for the island’s prized chip makers, Mr. Ke said.
“The direction of government support is entirely misplaced. It’s primarily focused on the A.I. industry,” he said. Textile products fell by the wayside.
Questions about who benefits from the technology windfall have become a source of political and labor tension in South Korea.
Last month, workers at Samsung threatened a strike that would have disrupted the national economy and the global technology supply chain, demanding that the company commit 15 percent of its operating profit to employee bonuses. Samsung agreed to 10.5 percent.
Should Samsung reach the roughly $200 billion in operating profit this year projected by some financial analysts, workers in its semiconductor division could receive bonuses of as much as $430,000, a spokesman for Samsung said. The average monthly wage in South Korea last year was around $2,800, according to government data.
Asked at the company’s annual shareholders meeting this month whether TSMC might adopt a similar arrangement, its chairman, C.C. Wei, said the company had increased employee bonuses over the past three years.
The dispute at Samsung may be an early sign of a wider debate over how the gains from artificial intelligence should be shared.
Before workers reached an agreement with the company, Kim Yong-beom, chief of staff to Lee Jae Myung, South Korea’s president, floated the idea of using tax revenues from companies benefiting from A.I. demand to fund what he called a “national dividend.”
“The critical concern is the potential for the excess profits generated in the A.I. era to structurally exacerbate the ‘K-shaped’ economic divide within society,” Mr. Kim wrote in a Facebook post that has now been deleted.
Allocating a portion of these profits to workers should not be viewed merely as an act of redistribution, Mr. Kim said, but a “necessary cost for maintaining the stability of the entire system.”
Amy Chang Chien, Xinyun Wu and Jin Yu Young contributed reporting.
Meaghan Tobin covers business and tech stories in Asia with a focus on China and is based in Taipei."
