Sam Altman, CEO of OpenAI, recently compared a potential stock bubble forming in the AI industry to the Dot-Com boom, stating, “People will overinvest and lose money, and underinvest and lose a lot of revenue.” Altman refers to the massive amount of capital poured into AI startups over the last few years, mostly from big American corporations. Despite that, the industry itself is heavily dependent on another country: Taiwan.
Taiwan is home to 90% of the world’s most advanced semiconductor production – that is, 90% of the tiny silicon squares that power virtually every new piece of technology. Semiconductors are vital parts of processing chips used for phones, solar panels, car transmissions, smart fridges, and the rapidly progressing development of new AI models. In 2023, OpenAI’s GPT-4 model was released, and its training was estimated to use more than 20,000 microchip processors. In 2025, they released GPT-5, and it used more than 150,000.
The scale of its semiconductor production makes Taiwan indispensable to the American economy. Taiwan’s production is spearheaded by the tech giant Taiwan Semiconductor Manufacturing Company(TSMC), which manufactures the chips designed by Apple and NVIDIA for billions of dollars in profit. Their two trillion dollar market cap places them at sixth in the world, and only continues to increase with more demand from the growing tech industry.
A catalyst for this success, the Taiwanese government has been more supportive of its chip manufacturing industry than most countries. Large subsidies, infrastructure, and tax incentives make TSMC’s expansion quicker and cheaper. Additionally, Taiwan’s immense mass of skilled workers allows the company to produce high quality chips with more efficiency. Lower contracting fees and fewer labor regulations in Taiwan make any would-be American competitors unable to achieve the cost efficiency of TSMC. The Taiwanese company even opened its first US-Domestic facility in Arizona, but the construction faced those exact issues with America’s complex safety legislation and labor shortages.
With America in a surge of AI development, Taiwan’s success in the semiconductor industry has proved incredibly profitable. TSMC’s biggest customer, NVIDIA, is currently the highest valued company in the world. The company designs the most advanced microchips in the world, and is estimated to control over 80% of the AI market. The millions of GPU chips that OpenAI uses for its development all come from NVIDIA, and the money made is put back into OpenAI (NVIDIA is its 2nd highest investor). This symbiotic relationship gives NVIDIA a guaranteed customer for its chips, and it gives OpenAI a strong source of funding. Recently, however, more companies are buying into AI development, and they are buying in big. Google, Microsoft, and Amazon have all spent billions investing in AI, inflating market valuations and potentially creating a cycle of unsustainable spending. Additionally, AI companies that heavily invest in each other may inflate their values further without stimulating any outside revenue. While the potential crisis at hand may be concerning, any speculations of a market crash remain just that: speculations.
