Taiwan’s central bank governor said Thursday that the AI boom is driving the economy, while warning lawmakers that speculative capital expenditures and aggressive corporate borrowing could blow it up.
Who Holds the Levers
Governor Yang Chin-long delivered the warning at a parliamentary hearing, where the central bank’s power sat squarely over the tech sector’s feverish expansion. He told lawmakers that the AI boom has become a major driving force in Taiwan’s economy, but said the central bank must carefully monitor the risks of over-expansion financed by over-leveraging. That’s the language of the people who get to watch the machine from the control room while everyone else lives with the consequences.
“We do have concerns about the possibility of an AI bubble,” Yang said. “AI is driven by real growth potential, but it’s the possibility of over-expansion via over-leveraging that concerns us.” The quote lands with a thud. Real growth, sure. But the same system that celebrates the boom also loads it up with debt and speculation, then asks the public to trust the adults in the room.
At the central bank’s quarterly meeting in June, its board did not consider inflationary pressures amid the AI boom sufficient to justify an increase in interest rates. The decision to hold rates steady was not unanimous. Yang said the decision was appropriate given the underperformance of traditional industries relative to the booming tech industry. The hierarchy is plain enough: one sector surges, another lags, and the central bank calibrates the damage from above.
Who Pays for the Boom
Taiwan plays a crucial role in the global AI supply chain for tech giants including Nvidia and Apple, anchored by chipmaker Taiwan Semiconductor Manufacturing Co, or TSMC. That role has helped lead Taiwanese stocks to record highs this year. The gains sit at the top of the pile. The risks, as usual, are spread underneath.
The importance of Taiwan’s chip industry for the AI supply chain is reflected by Nvidia CEO Jensen Huang’s frequent and high-profile visits to the island, including his recent major trip for June events such as Computex and NVIDIA GTC Taipei. The bosses of the global tech order don’t need to hide their dependence. They show up, take the stage, and let the island’s industrial machine keep grinding.
TSMC, the world’s biggest contract manufacturer of chips that power AI, said last month that demand remained high with customers still upbeat on the AI outlook, even as it was monitoring the impact of rising component costs. That’s the familiar script: demand stays high, optimism stays loud, and the costs keep creeping upward through the supply chain. The people making the chips don’t get to set the terms of the boom. They just keep the line moving.
What the Hearing Revealed
Yang’s remarks came in a setting built for managed concern, not disruption. Lawmakers heard that the AI boom is real, that the risks are real, and that the central bank is watching. The board’s June decision to hold rates steady showed how the institution responds when speculation and inflation fears collide with the interests of the tech sector.
The underperformance of traditional industries relative to booming tech was part of Yang’s justification. That gap matters because it shows who gets lifted by the current arrangement and who gets left behind. The record highs belong to the chip giants and the investors riding them. The warning signs belong to everyone else.
Taiwan’s role in the AI supply chain has made its economy a key node for Nvidia, Apple, and TSMC, while the central bank now says it must keep an eye on the debt-fueled excesses that can come with that kind of growth. The system keeps calling it progress. The bill, as ever, comes later.