US overtakes China as Taiwan's top export destination after 2 decades amid AI boom: Fitch

By Ovunc Kutlu

ISTANBUL (AA) - Fitch Ratings said Wednesday that the US has overtaken mainland China as Taiwan's top export destination for the first time in over two decades.

Taiwan's exports to the US surged by 62% in July on an annual basis amid the rising global demand for advanced chips and artificial intelligence (AI), it noted.

"Industry giants have ramped up spending on advanced semiconductors and servers from Taiwan to develop AI technology and applications," the rating agency said in a statement.

"The AI-fuelled semiconductor recovery and the ongoing reshoring trend will spur more domestic investment," it added.

Fitch expects Taiwan's economic growth to accelerate to 4% this year, from 1.3% last year, supported by a surge in high-tech exports amid the global boom in AI.

"However, downside risks could come from a sharp slowdown in growth among Taiwan's major trading partners, waning demand from the global AI spending boom, geopolitical tensions and uncertainty around the US's post-election trade strategy," it warned.

Fitch affirmed Taiwan's long-term foreign currency issuer default rating at AA+ with a stable outlook.

The rating agency said Taiwan's ratings are supported by its strong external finances, prudent fiscal management, high governance indicators, and competitive business environment.

These factors, on the other hand, are balanced by the country's vulnerability to external demand shocks and abrupt shifts in global trade policy that could affect the technology sector and supply chains.