Taiwan's bilateral trade with Singapore surged 94.1% in the first half of 2026, pushing Taiwan's lead over China as Singapore's top trading partner to S$63.2 billion, a gap that Taiwan's representative to Singapore says all but guarantees Taiwan will hold the top position for another year.
"Unless something enormous happens, Taiwan should firmly hold the number-one position for the whole year, and be ahead of many other countries," Tung Chen-yuan, representative of the Taipei Representative Office in Singapore, told The Storm Media in an exclusive interview on August 24. After Taiwan first displaced China as Singapore's largest trading partner in 2025, with a S$7.4 billion advantage, the gap has expanded nearly ninefold in just one year.
Behind those figures lies a set of structural advantages linking Taiwan's semiconductor production system to broader shifts in global capital flows.
Taiwan is experiencing an unusual economic acceleration on the back of the AI boom. Data from Taiwan's Directorate-General of Budget, Accounting and Statistics (DGBAS) show GDP growth of 15.43% in the first quarter of 2026 and 12.93% in the second, for a combined first-half rate of 14.15%, approximately 2.3 times Singapore's 5.7% and six times the United States' 2.1% over the same period. Full-year growth is forecast at 11.05%, with GDP projected to exceed one trillion dollars for the first time, reaching an estimated US$1.0536 trillion.
TSMC, IC Design, and Packaging Form Taiwan's Semiconductor Moat
Representative Tung cited a string of market-share figures to illustrate Taiwan's indispensability in the global semiconductor supply chain. TSMC held 72% of the global foundry market in the first quarter of 2026, up from 69.9% in 2025. Taiwan's IC design firms account for 18.7% of the global market, while the island's advanced packaging and testing sector commands a 48.1% share worldwide.
"Taiwan's semiconductor standing in the world goes without saying," Tung said. "Overall, Taiwan's global ecosystem is an extremely complete semiconductor production system."
He added that Taiwan's advantages now extend across the broader AI infrastructure ecosystem. From AI servers and power management systems to liquid cooling solutions, Taiwanese manufacturers such as Delta Electronics and Auras Technology hold critical positions in global markets. NVIDIA, Qualcomm, AMD, Intel, and Samsung all maintain close supply-chain relationships with Taiwan.
Singapore's own semiconductor sector is substantial: the industry contributes 6.7% of GDP (reaching 7.8% at its peak) and accounts for roughly one-third of manufacturing output. Singapore also controls approximately 10% of global chip exports and around 20% of semiconductor equipment exports, positioning it as a tightly complementary industrial node to Taiwan.
Bilateral investment between the two sides has accumulated over decades. United Microelectronics Corporation (UMC) entered Singapore in 2001 with a US$3.6 billion investment and added another US$5 billion in 2022. Vanguard International Semiconductor partnered with NXP in 2024 to commit US$7.8 billion, setting a new record for a single manufacturing investment in Singapore. Powertech Technology invested US$400 million in July 2026 to establish a joint venture with Broadcom Technologies in Singapore focused on panel-level advanced packaging substrate manufacturing.
The trade structure reflects this industrial integration. Semiconductors and AI-related products account for 85% of Taiwan's exports to Singapore and 80% of Singapore's exports to Taiwan.
"Because global semiconductor development has been moving extremely fast in recent years, especially on the AI demand side, bilateral trade between Taiwan and Singapore grew another 94.1% in the first half of this year," Tung said.
He elaborated: "Taiwan was already the largest trading partner last year, and now it has grown another 94.1%. Last year, Taiwan led second-place China by S$7.4 billion. In the first half of this year alone, the lead over China has expanded to S$63.2 billion. So I believe that unless something massive happens, Taiwan should firmly hold the number-one position this year, and be ahead of many other countries."
Singapore's Rise as a Global Capital Hub Translates Directly into Taiwan Investment
The strength of Taiwan-Singapore trade is inseparable from Singapore's rapid ascent in global capital markets. According to UNCTAD's World Investment Report 2026, Singapore in 2025 became the world's second-largest destination for foreign direct investment for the first time, attracting US$150.9 billion, trailing only the United States (US$277.3 billion) and surpassing Hong Kong (US$116.5 billion). China ranked fourth at US$104.7 billion, down more than 40% from its 2022 peak.
A six-year trend makes the structural shift clear. Singapore's FDI inflows more than doubled from US$71.1 billion in 2020 to US$150.9 billion in 2025. Over the same period, Hong Kong's inflows fell from US$134.7 billion to US$116.5 billion, and China's dropped from US$149.3 billion to US$104.7 billion. New international capital flowing into Asia is concentrating in Singapore at an accelerating pace.
Singapore has also emerged as a significant exporter of capital. In 2025, its outbound direct investment reached US$94.2 billion, a 70% year-on-year increase, lifting its global ranking from ninth to sixth, just US$1.1 billion behind fifth-place Hong Kong (US$95.3 billion).
That dual role as both a major recipient and source of capital is translating into direct investment returns for Taiwan. In the first half of 2026, Singapore-origin investment into Taiwan exceeded US$5 billion, accounting for 60.2% of Taiwan's total FDI intake for the period, a 14.6-fold increase year-on-year. The largest single transaction was Micron Asia's approximately US$4.3 billion investment, a record for any single foreign investment in Taiwan. Micron's broader Singapore footprint is even more substantial: the company has already invested US$7 billion in the first half of this year to expand memory capacity and has pledged a further US$24 billion over the next decade, directly addressing the surging demand from Taiwan's AI server manufacturers.
As of end-2023, approximately 4,200 multinational corporations had established headquarters or Asia-Pacific regional headquarters in Singapore, with assets under management of US$5.2 trillion, spanning venture capital, private equity, and corporate investment funds.
"Many European, Japanese, and even American companies are looking to collaborate with Taiwan through Singapore," Tung said. "For working with multinationals, channeling capital, and helping Taiwanese companies scale up, Singapore is an extremely important base."
Taiwan's technology sector is increasingly using Singapore as a springboard for global expansion. Systems integrator Ennoconn Technologies acquired Singapore-listed company Nara in 2024, and the company's market capitalization rose 150% within a year, a representative case of a Taiwanese hardware manufacturer using Singapore to pivot toward smart applications and expand across Southeast Asia.
On the logistics side, Singapore handled 44.66 million TEUs of maritime container throughput in 2025, ranking second globally behind Shanghai's Yangshan Port, and serving as a critical transshipment hub for semiconductor equipment, raw materials, and mature-node products destined for Taiwan.
Johor-Singapore Economic Zone Adds a Third Leg to a Deepening Regional Architecture
The AI supply-chain boom is acquiring a new geographic dimension. Singapore's land area of just 735.6 square kilometers and a population of 6.11 million impose hard constraints on land and electricity, making large-scale expansion of data centers and other land- and power-intensive AI infrastructure within city limits increasingly difficult. UNCTAD's report notes that Singapore has already developed a "Singapore-plus-one" cross-border division of labor: high-value-added functions remain in Singapore, while data centers and manufacturing capacity are allocated to neighboring Johor in Malaysia.
The Johor-Singapore Special Economic Zone agreement, signed between the two governments, will be reinforced by a rapid transit link between the two cities scheduled to open in January 2027. Tung expects the connection to generate a new corporate location logic: regional headquarters and R&D functions anchored in Singapore, with data centers and manufacturing capacity relocating to Johor, where land is cheaper and power more abundant.
"Johor can offer land and sufficient electricity," he said. "I believe this will have considerable implications for how Taiwanese companies structure their regional presence."
Malaysia's Penang is already a significant production base for Taiwan's semiconductor supply chain. ASE Technology Holding stations hundreds of engineers in Singapore while concentrating primary manufacturing in Penang; Delta Electronics maintains its regional corporate headquarters in Singapore while locating production lines in Malaysia. "Malaysia has comparative advantages in land, labor, and electricity, which gives Taiwanese companies a more complete set of options and creates a complementary relationship," Tung said.
Taiwan's role in this evolving regional architecture is shifting from passive adaptation to active positioning. TSMC's commitment to invest US$265 billion in the United States is drawing its entire supply-chain ecosystem along with it; Powerchip Semiconductor has announced plans to invest in Texas as well. In Representative Tung's assessment, the Taiwan-Singapore relationship has entered a "mutually expanding" virtuous cycle, and it is that structural dynamic, more than any single trade figure, that underpins his confidence that Taiwan will continue to hold the top position in Singapore's trade rankings for the foreseeable future.
Original Article in Chinese
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