Taiwan: AI cycle and 2H outlook – DBS

DBS Group Research, led by Ma Tieying, assesses Taiwan’s AI-driven expansion and its implications for the 2H26 outlook. The bank notes that AI remains central for Taiwan’s technology-oriented economy and that the AI supercycle is nearing a peak. DBS expects Taiwan to maintain above-trend growth through 3Q26 before normalizing from 4Q26, with inflation staying sticky and GDP and CPI forecasts revised accordingly.

AI supercycle nears cyclical peak

"The AI outlook is balanced between strong structural optimism and rising cyclical caution."

"AI remains the central theme shaping the 2H26 economic outlook, particularly for technology-oriented economies such as Taiwan.We monitor the AI cycle across three layers: AI token usage, hyperscaler capital expenditure, and semiconductor demand and supply."

"These indicators suggest that the momentum of the AI super-cycle is approaching a peak."

"Taiwan entered 2026 with exceptionally strong economic momentum."

"Looking ahead to 2H26, we expect Taiwan to maintain above-trend growth through 3Q26 before activity begins to normalize from 4Q26 onward."