Taiwan Central Bank Governor Warns of AI Bubble Risks
N.R. Finch
Taiwan's central bank governor Yang Chin-long warned on July 9 that while the AI boom is backed by real growth, the central bank is concerned about aggressive leveraged expansion in the tech sector — a signal that Taiwan's high-flying tech stocks face a new layer of policy risk.
What exactly is the central bank worried about?
Speaking at a legislative hearing, Yang stated clearly: AI is driven by real growth potential, but the central bank's concern is companies over-expanding through excessive leverage.
This means → the regulatory focus has shifted from "will AI push up inflation" to "are tech firms borrowing too much."
In plain terms = the central bank isn't questioning AI itself — it's worried companies will pile on debt chasing the AI wave and be unable to repay when the tide turns.
Why did interest rates stay unchanged?
Taiwan's central bank held rates steady at its June quarterly meeting, judging that AI-driven inflation pressure was not yet strong enough to justify a hike.
But the decision was not unanimous — indicating internal disagreement over whether tightening is overdue.
Yang added another consideration: traditional industries are lagging far behind the tech sector, and a rate hike now would squeeze them further.
This reflects a central bank walking a tightrope — tech running too hot, traditional industry too cold, and the interest-rate tool unable to serve both sides at once.
How critical is Taiwan in the AI supply chain?
TSMC (台積電) is the world's largest chip foundry, supplying Nvidia and other major players — a core link in AI hardware.
AI demand has driven Taiwan's stock market to repeated record highs this year.
But TSMC noted last month that while customers remain optimistic on AI, the company is monitoring the impact of rising component costs.
What does this mean for investors?
Yang's warning signals → if tech-sector leverage keeps expanding, the central bank's future policy stance could turn more cautious.
In plain terms = Taiwan tech stocks are trading at high valuations largely supported by the AI narrative — if the central bank actually moves to curb borrowing, that support loosens.
This is not a "sell now" signal but a potential policy-level pressure point — one worth watching closely.
Content is for reference only, not financial advice.