Central Bank Governor Yang Chin-long told lawmakers at a parliamentary hearing this week that Taiwan's central bank is closely watching for signs of an AI-fueled asset bubble, as the AI boom drives the TAIEX to record highs. "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 warning comes as investor margin borrowing surged roughly 170% over the past 12 months to an all-time high, while the TAIEX — now the world's fifth-largest market at roughly $5.1 trillion — has risen about 60% since the start of 2026, driven by chipmakers tied to the global AI buildout like TSMC. Lawmakers flagged a "four loans" problem: mortgages, margin financing, personal credit, and car loans increasingly redirected into AI stocks.
Rather than declaring an outright bubble, Yang stopped short of signaling systemic risk, saying market fundamentals remain sound, while the central bank's June meeting held interest rates steady. The episode underscores how deeply Taiwan's economy — anchored by TSMC's central role in AI chip supply — is now tied to global AI investment sentiment.