Alicia Garcia-Herrero, chief APAC economist at Natixis, says Taiwan's government is focusing on the value of the semiconductor industry and the AI boom – but a lack of diversification could be an issue for other segments in the economy.

Taipei City

Taiwan's economy is heavily driven by its semiconductor industry, particularly companies like TSMC, which continue to see record growth. While this sector remains robust and benefits from global demand, especially from the United States, other traditional industries in Taiwan are facing difficulties and are not experiencing similar growth.

Efforts by the Taiwanese government to diversify the economy have been limited, with most initiatives focused on expanding within the technology sector rather than developing new industries. The strong performance of the semiconductor sector has also led to an appreciation of the Taiwan dollar, making it harder for traditional sectors to compete internationally. This overreliance on semiconductors is raising concerns about the long-term health and balance of Taiwan's economy.

Taiwan's reliance on semiconductors 'hurting' economy

So the major segment or I should say the key component of the Taiwan economy is a semiconductor. So I want to ask first about the big story today. NVIDIA investing 100 billion dollars into open a I just a day earlier five billion dollars into Intel. What is the impact on Taiwan on TSMC because the shares today are trading at record highs. Yes. And rightly so because Intel is no threat for TSMC on the country. It only shows that NVIDIA will need even more chips to build more GPUs to serve open AI. And Intel is just part of the Trump story of reshoring helping the U.S. economy. But that's not going to affect Taiwan. In fact second quarter was record high growth 8 percent growth for Taiwan. That's not what's going to stop the island. However the divergence between the semiconductor sector. By the way the SMC is exempted from tariffs to make things even worse. And the rest of the economy traditional sectors. That's where the problem lies because those are suffering. The other sectors not the semiconductor sector. So what does the island need to do. They are overreliant on the semiconductor industry. This has been the case for quite some time now. I remember talking to you about this when we were looking to a president like Intel and when he was elected into office. What is the government doing to diversify its economy. Practically not much. If anything I mean I understand that Taiwan wants to ride on the revolution because it has everything to do so. So it's kind of integrating vertically. It's looking into packaging. It's looking into software. It's looking on you know getting more out of this actual sector that it dominates. But the question is will this not be a so-called Dutch disease where everything becomes more expensive for everybody else including in a way the exchange rate. We saw that in late May. Big jump of 8 percent appreciation of the entity on the tariff. So you know for the rest of the of the Taiwanese economy whatever happens with the semiconductor sector is fine but it's not enough. It's actually hurting them in relative terms. And how are they doing in terms of evolving their trading relationships. Their biggest trading partner continues to be China. Then that of the United States. The United States has a 20 percent levy on their goods. Yeah actually by now on the export side the U.S. dominates heavily. But you're right. It's only on the semiconductor space not only but mostly. And instead the rest the traditional sector is in a way dependent on China's inputs. Very much. There's no such thing as known as a known rate supply chains yet. I mean the Taiwanese government is trying for another potential important sector which is drones. So on the military space. But it's very far from that. And at the same time these traditional sectors say the banks or you know any any sector that competes with China in the market is being crushed because the entity is much stronger than the R&D class. Of course tariffs into the U.S. being increasingly similar. If you think about what might happen in the APEC summit maybe China will have lower fentanyl tariffs. Then you know the competition gets heater and heated and heated for Taiwan. So. So yeah not enough diversification. That was your question. Not enough at all. You mentioned that the currency exchange rate we're looking at the Taiwan dollar 30 dollars I should say three zero point one eight eight and a year to date it has appreciated almost 8 percent against the green back. What is causing this strength. And where do you see the Taiwan dollar. Well frankly speaking I think that that jump which was actually you know in May as you see in the graph the sudden jump was in my opinion although you know the central bank will not confirm that rightly. So it related to negotiations with the U.S. with the Trump administration. Taiwan has very little to offer that current juncture. It can't pass a budget. They you know military spending is basically frozen. By the way Trump has actually on top of that stopped 400 million in military to Taiwan. So you know it's just no no no way to go. So the currency is kind of the only instrument I think Taiwan could offer at the time. And on top of that I think generally everybody is happy sitting against the dollars. If you put all of that together I think that's where we stand. And this is a problem for traditional sectors because China or even Vietnam for that matter are not doing as much on the currency as Taiwan.

Russian President Vladimir Putin offered to voluntarily maintain the limits on deployed strategic nuclear weapons set in the 2010 New START accord after it expires in February if the U.S. agreed to do the same.

Moscow

Putin offers Trump one-year extension to nuclear weapons treaty

Nvidia will invest up to $100 billion in OpenAI and supply it with data center chips, the companies said, marking a tie-up between two of the highest-profile players in the global artificial intelligence race.

San Francisco

Rise of AI

Nvidia to invest $100 billion in OpenAI, linking up two AI titans

President Trump announced Monday the FDA believes pregnant women should not take acetaminophen, the active ingredient in Tylenol, claiming there could be a link between the medication and autism, despite objections from medical experts.

Washington

Trump, FDA tell pregnant women not to take Tylenol

ABC announced Monday that "Jimmy Kimmel Live!" will return to the air Tuesday night (September 23). The network pulled the show last week following a remark from Kimmel about the death of Charlie Kirk.

Los Angeles

Jimmy Kimmel returning to air

As leaders from around the globe come together at the United Nations General Assembly in New York this week, conflicts in Gaza and Ukraine continue to rage.

New York

World leaders come together at UNGA as global tensions rise

Monday marks the second day of strike action after a similar walk-off was called on Sunday by the southern European country's largest trade union, the Italian Confederation of Labour (CGIL).

Rome

Middle East Conflict

Thousands strike across Italy in solidarity with Palestinians in Gaza

The Trump administration is adding $100,000 to the existing fee for H-1B visa applications, taking aim at a program that is used to attract highly skilled workers to the U.S.

Trump administration to add $100,000 fee for H-1B visas

President Donald Trump urged Attorney General Pam Bondi in a social media post to move forward with cases against several people connected to the U.S. government. CBS News justice correspondent Scott MacFarlane has more.

Trump urges Pam Bondi to go after his political foes

Russia is denying that its planes entered Estonian airspace on Saturday, according to Kremlin spokesman Dmitry Peskov, but Estonia's foreign minister is saying the government has "irrefutable evidence" of the incursion.

Ukraine Invasion

Russia denies violating Estonian airspace

U.S. President Donald Trump was the final speaker at a politically charged memorial service for conservative activist and MAGA influencer Charlie Kirk that also included words of forgiveness from Kirk’s widow as well as remarks from the vice-president and one of Trump’s sons.

Glendale

Trump closes out Charlie Kirk memorial

Media mogul Lachlan Murdoch and business leaders Larry Ellison and Michael Dell would be involved as U.S. investors in a proposed deal to keep TikTok operating in the United States, according to President Donald Trump speaking to Fox News channel.

Trump says Murdochs would be involved in TikTok deal

Portugal, the UK, Australia and Canada joined over 150 countries that now recognise a Palestinian state. The announcements come ahead of the United Nations General Assembly in the week ahead.

Lisbon

Portugal formally recognises Palestinian state

Police say a 23-year-old was arrested and charged Sunday night with second-degree murder after one person was killed and several others were injured in a shooting at a New Hampshire country club. Witnesses say the shooter said “free Palestine” and before opening fire.

Nashua

Suspect yelled 'free Palestine' before country club shooting

President Trump is demanding that the Justice Department go after his political rivals following a shakeup in the U.S. Attorney's Office in Eastern Virginia. Willie James Inman reports.

Trump pressuring Justice Department to pursue his political foes

President Trump, Vice President JD Vance and several others remembered Charlie Kirk at a memorial service in Arizona that was attended by thousands.

Phoenix

Trump, others remember Charlie Kirk at memorial service

The United Kingdom, Canada and Australia officially recognized Palestine as a state Sunday, a move that has long been opposed by the U.S. and Israel. More countries are expected to do the same this week as world leaders gather in New York for the U.N. General Assembly.

Tel Aviv-Yafo

Israel continuing assault on Gaza after countries recognize Palestinian statehood

A group of US Republicans has sent a letter to France, Canada, the UK and Australia, urging them to re-consider their decision to recognise a Palestinian state.  It's warning there may be consequences if the countries move ahead with plan at the upcoming UN General Assembly.

US Republicans warn allies over decision to recognise Palestinian state

Britain, Canada and Australia all recognized a Palestinian state on Sunday (September 21) in a move borne out of frustration over the Gaza war and intended to promote a two-state solution, but which is also bound to anger Israel and its main ally, the U.S.

Britain, Canada and Australia all recognize Palestinian state

The President of the Palestinian Authority, Mahmoud Abbas, will address the UN on Monday, after the General Assembly voted to allow him to join remotely. The U.S. has refused to issue him a visa to attend in person.

UN approves video address by Palestine’s Abbas after U.S. visa refusal

Sixty nations have agreed to a new treaty aimed at protecting marine biodiversity in international waters. But the strength of the deal governing the high seas is uncertain as some of the world’s biggest players - including China, the U.S., Russia and Japan - have yet to ratify.

Nations ratify world's first treaty to protect international waters

A cyberattack on a provider of check-in and boarding systems has disrupted operations at several major European airports including London's Heathrow, the continent's busiest, causing flight delays and cancellations on Saturday (September 20).

London

Travelers stranded as cyberattack disrupts major European airports

The high seas will soon have their own Conference of the Parties (COP). This new body will oversee the implementation of the Agreement on the Conservation and Sustainable Use of Marine Biological Diversity of Areas Beyond National Jurisdiction, which is scheduled to enter into force in early 2026 after the legally required 120-day period.

Manhattan

Optus, Australia's second-largest telecom carrier, promised on Saturday "full cooperation" with official investigators, after an outage disrupted emergency call services for 13 hours. Four people died amid the technical failure, including an eight-week-old boy.

Melbourne

Telco vows to cooperate after deadly outage

Dozens more Palestinians have been killed in Israel’s military offensive. Amid mounting international criticism of Israel, there has been a renewed push for a two-state solution, with Portugal being the latest advocate.

Two-state solution gains support as IDF moves on Gaza City

Charlie Kirk will be mourned in a massive public memorial in Phoenix, Ariz., on Sunday. With U.S. President Donald Trump and other top U.S. officials attending, the event is expected to bring significant security concerns.

Thousands set to attend Charlie Kirk's public memorial

Russia has launched more than 600 attacks on multiple cities across Ukraine. President Volodymyr Zelenskyy is renewing calls for more support, and warning allies that defending Europe means defending Ukraine.

Kyiv

Russia launches mass strikes across Ukraine

A cyberattack has disrupted air traffic at several airports in Europe. Check-in and boarding systems went down in London, Brussels and Berlin. Europe’s aviation safety organisation says airlines were asked to cancel 50% of their flights to reduce pressure on the system.

Heathrow Airport

Flight chaos as UK, European airports hit by cyberattack

Three Russian military jets violated NATO member Estonia's airspace for 12 minutes on Friday in an "unprecedentedly brazen" incursion, its government said, the latest in a series of recent military actions by Russia that have rattled the alliance.

Tallinn

Russian jets enter Estonia's airspace in latest test for NATO

President Trump said Friday that he and Chinese President Xi Jinping "made progress" on a deal over TikTok ownership, and that he would visit China early next year.

Trump says he and Xi Jinping 'made progress' on TikTok deal

The apparent remains of Travis Decker, the man suspected of killing his three daughters in Washington state, have been located and are undergoing DNA testing. A manhunt has been underway for Decker since his daughter's bodies were found in June.

Breakdown