From 3.71 percent to 10.16 percent.

When the Institute of Economics at Academia Sinica, Taiwan’s foremost national research institution, released its projection for the country’s annual gross domestic product (GDP) growth in 2026 last month, it represented a staggering 6.45-percentage-point increase from its previous projection made in late December. Such a rate of growth is rarely seen in advanced economies and may even seem downright unrealistic.

If Taiwan does exceed a 10 percent growth rate, it will be the first time the country has seen a double-digit growth in 16 years, since 2010. The nation’s GDP already jumped 14.5 percent year-on-year in the first quarter, fueled by a global investment boom in artificial intelligence (AI), while demand for advanced chips and servers is projected to persist into the second half of the year.

The glossy growth outlook did not stand alone, as other economic research institutes issued similarly optimistic projections. On July 22, the Chung-Hua Institution for Economic Research (CIER) forecast Taiwan’s economic growth at 10.35 percent for the year, while the Taiwan Institute of Economic Research projected growth of 10.38 percent.

On the streets of Taiwan, however, those gleaming growth projections were hardly felt, as ordinary Taiwanese people interviewed by Hankook Ilbo reacted cynically to the 10 percent growth rate and dismissed it as something that existed only in the news.

The growth, heavily skewed toward the semiconductor industry and a few related sectors, indeed brought rapid expansion and generous pay raises to those industries. However, other sectors and wages for their workers are continuing to stagnate or decline, forming a K-shaped economic structure whose side effects are already beginning to take a toll.

**Higher average wages, at least on paper **

The most misleading aspect of Taiwan's economy is its average income. According to the Directorate-General of Budget, Accounting and Statistics (DGBAS), Taiwan’s statistics agency, the average regular monthly wage in the first quarter of 2026 was $48,706 New Taiwan dollars (about $1,510), a 2.69 percent rise from the previous year.

In reality, things were far different, as some 69.95 percent of wage earners received less than the average pay, the highest proportion recorded since the statistics were first compiled. Despite the high growth rate, more Taiwanese were being left relatively worse off.

The sharp rise in the average wage was driven by highly paid workers in a handful of industries, including the semiconductor sector, which employs around 300,000 people. For the vast majority of Taiwanese people, the increase in the average wage is not tangible at all, according to Weber Chung, senior vice president of Taiwanese recruitment platform 104 Job Bank.

The wage gap between industries was also found to be substantial. In the first quarter of 2026, the average monthly wage in the electronic components manufacturing industry was NT$57,710. By contrast, the figure was just NT$34,524 in accommodation and food services and NT$37,172 in other services, including beauty and repair businesses. The median monthly wage in March was only NT$39,220.

The company that single-handedly pulled up the average was TSMC, the crown jewel of Taiwan's economy. In 2025, TSMC’s board approved a record NT$206.14 billion in employee performance bonuses and profit-sharing compensation, which was a 46.6 percent increase from NT$140.59 billion the previous year.

“The company offers a very high level of compensation, so most employees are satisfied,” said a TSMC employee interviewed at Hsinchu Science Park, about 70 kilometers from Taipei.

The illusion of the average

Outside the walls of TSMC, ordinary Taiwanese people are living vastly different lives. An employee at a supermarket in Taipei said he earns NT$200 per hour, barely above the legal minimum wage of NT$196.

“I have never personally felt the benefits of the semiconductor boom,” he said. “People talk about semiconductors everywhere I go, but each time, it only makes me feel left behind.”

Some appeared cynical about the growing income disparity. “I might have felt the boom if I had bought semiconductor stocks earlier, but that opportunity was only available to people who already had money,” said Huang, a 60-year-old Taipei resident. Chen, a man in his 50s, spoke with resignation. “Only the semiconductor and electronics industries have improved. Nothing has changed for everyone else,” he said. “It has been this way for so long that it is not even surprising anymore.”

For Taiwanese people growing poorer, pinching every penny has become a part of everyday life. On social media, a self-deprecating meme, “supermarket beggar,” has become popular, referring to people who seek out food nearing its expiration date and sold at discounted prices. At one convenience store in Taipei, shelves of salads and sandwiches emptied almost immediately after stickers offering a 30 percent discount were placed on them.

**Wealth gap dwarfs income gap **

Appearing even starker than the income gap is the wealth gap. According to the latest household wealth distribution data released by the DGBAS, covering 2021, the wealthiest 20 percent of households had an average net worth of NT$51.33 million, while the poorest 20 percent had an average net worth of just NT$770,000.

The wealth of the two groups differed by a factor of 66.9, compared with 16.8 in 1991. Although a direct comparison is difficult because different survey methods were used, the figures suggest that wealth polarization worsened markedly over the course of three decades.

Housing has played a key role in widening the wealth gap. “Inheritance from the previous generation is the only way to buy a home. It is nearly impossible for young people to afford one by working and saving diligently,” said Wang and Chen, a couple in their 50s living in Taipei, when asked about Taiwan’s wealth disparity. None of the residents interviewed on the streets believed it was possible to afford a home in Taipei on wage income alone.

In the fourth quarter of 2025, Taiwan’s house price-to-income ratio stood at 9.32 nationwide. In other words, the price of a median home was 9.32 times the median household’s annual disposable income. In Taipei, the ratio reached 14.62, meaning it would take a median-income household more than 14 years to buy a median-priced home even if it saved every penny it earned and spent nothing at all.

Local residents said homes are becoming increasingly unaffordable.

“Five years ago, apartments without elevators sold for NT$500,000 to NT$600,000 per 3.3 square meters, but prices have since risen to between NT$700,000 and NT$900,000,” said Daniel Lee, a real estate agent working in Taipei’s Da’an District. “In buildings with elevators, prices have increased from around NT$1.1 million to NT$1.6 million per 3.3 square meters.”

As housing prices have risen, rents have soared along with them. “In the past, you could rent an older three-bedroom apartment for NT$20,000 a month, but now you should expect to pay around NT$40,000,” Lee said. Considering that the average monthly wage for Taiwanese workers was NT$48,706 in the first quarter of 2026, most of a worker’s pay would be swallowed up by rent.

From 'egg yolk' to 'white' to 'shells'

Those who cannot afford skyrocketing rents are pushed to less desirable living spaces. Dotted across the roofs of old buildings in Taipei’s Da’an District are makeshift rooms added on top of original structures. While technically illegal as unauthorized extensions, some built long ago are effectively tolerated as residential units.

“Some have poor insulation and leaky roofs, but I move exclusively between rooftop units because the rent is cheap,” said a man who runs a cafe in downtown Taipei. “My current rent is NT$18,000 a month, which is NT$10,000 less than an apartment on the floor below in the main building.”

Rooftop and balcony extensions have existed in Taiwan for decades, but demand for them has reportedly grown as the property market has overheated.

Another way to cope with burdening rent is sharing the space with others. “If a three-bedroom home rents for NT$40,000 a month, three or four co-workers, friends or sometimes complete strangers split the cost, reducing each person’s share to around NT$10,000,” said a man interviewed in Taipei. As demand for shared housing has grown, some landlords have begun recruiting tenants separately for each room.

In Taiwan, Taipei is commonly described as the “egg yolk,” while surrounding areas such as New Taipei City, which is connected to the capital by metro lines and bridges, are known as the “egg white.” Luo, 45, who lives in Fengming in New Taipei City’s Yingge District — part of the “egg white” — said “it takes more than 30 minutes to reach Taipei by train, but living here has definitely reduced my housing costs.”

But the prices in “egg white” regions are also starting to climb. “A home I bought three years ago for NT$450,000 per 3.3 square meters is now worth as much as NT$900,000,” said a man who works in Taipei. “Because the price was relatively low to begin with, it had much more room to rise.”

Those who still cannot afford housing are pushed even farther beyond New Taipei City to areas known as the “eggshell.” “Most ordinary people face an unwelcome choice: pay more to live in Taipei and retain access to jobs and other opportunities, or give up those opportunities in exchange for a relatively decent living environment,” said Chang Ying-hui, a professor in the Department of Land Economics at National Chengchi University.

**Bleak future for nonsemiconductor industries **

Despite its astonishing growth rates, Taiwan’s economy is seen as vulnerable because its industrial landscape is overly concentrated in a handful of sectors. In 2025, the country’s total exports reached $640.7 billion, making it the world’s 12th-largest exporter according to World Trade Organization statistics, up from 16th place the previous year. It was also Taiwan’s highest ranking since 1993.

A look at the composition of those exports reveals the problem. Electronic components and information, communications and audiovisual products together accounted for $474 billion, or roughly 74 percent of the total, demonstrating the country’s heavy dependence on electronics and information and communications technology (ICT) products — particularly semiconductors, servers and computers — for its exports.

Taiwan’s Ministry of Finance underscored this concentration in its assessment of the country’s export performance: “The country was able to increase its share of global exports by capitalizing on commercial opportunities created by the AI boom, thanks to its leading position in semiconductor and ICT development.”

Consumption and investment have rebounded somewhat this year, and nontech manufacturing sectors are showing signs of recovery. However, the gaps in growth and wages between traditional industries and the high-tech sector remain wide.

“Apart from semiconductors, Taiwan does not have many industries with pricing power in global markets and high profit margins,” said Wen-Tai Hsu, a professor of economics at National Taiwan University. “Industrial diversification is needed to reduce the risk of putting all our eggs in one basket.”

Deepening disparities between industries undermine the competitiveness of the economy as a whole. Small and medium-sized companies that cannot match the pay and benefits offered by semiconductor firms struggle to recruit the talent they need. This creates a downward spiral, a shortage of skilled workers making it difficult for companies to develop technology and improve productivity, which further weakens their ability to attract talent.

“There are clear gaps between the semiconductor sector and traditional industries in revenue, investment and the ability to attract talent,” CIER President Hsien-Ming Lien said. “The government’s effort to encourage machinery companies to produce semiconductor manufacturing equipment is part of a strategy to spread the semiconductor industry’s success to other sectors.”

Taiwan’s polarization across industries and society should sound familiar to Korea, which is experiencing the same semiconductor upcycle. The Bank of Korea, expecting annual growth in 2026 to significantly exceed its earlier forecast of 2.6 percent, noted that a key determining factor would be how widely and evenly the benefits of the semiconductor boom spread throughout the economy.

Because the sector is capital-intensive, even a semiconductor boom has a relatively limited effect on job creation. Taiwan’s experience serves as a warning to Korea to beware of the “average trap” — the illusion of strong headline growth that diverges sharply from economic conditions experienced on the ground.

This article from the Hankook Ilbo, the sister publication of The Korea Times, is translated by a generative AI system and edited by The Korea Times.