On Friday the Taiex slipped 755 points and the usual suspects wrote “geopolitics.”
Well, Hunkle can tell you that it was not geopolitics. It was American producer prices and a Fed that might raise rates next week. TSMC fell because Philadelphia fell. The invasion rehearsal, as usual, was not on the tape.
That is the joke, if you have been watching Taiwan’s market for more than one news cycle. The People’s Liberation Army flies through the air-defence zone, encircles the island, practices blockades and issues statements about 台独. Fund managers wait for the close, then buy the dip in anything that makes a wafer. The threat is real but the pricing is ruder.
The benchmark printed an all-time high of 48,218 in June. A year earlier it was living in a different postcode. Even after Friday’s washout it sat near 46,185 — still up about 81% on the year. Listed companies were worth some NT$151 trillion. For a stretch this spring the whole market flirted with fifth place on the planet, a few hundred billion behind Hong Kong and breathing on India. One company did most of the breathing.
TSMC 台积电 is not a stock. It is the index with a logo. More than 40% of the Taiex lives inside that ticker. High-performance computing was 66% of TSMC’s second-quarter revenue. Advanced nodes at 7 nanometres and below were 77% of wafer sales. Foundry market share is sitting around 72%. For perspective, Samsung, the official runner-up, is a rounding error with better advertising and Nvidia has nowhere else to send the serious stuff. Jensen Huang doesn’t listen to slogans. He wants factory schedules that deliver.
The island’s customs data is the same story with a flag on it. For some boring but necessary data provided by AI, Taiwan’s August exports hit a record US$82.4 billion, up 41%, the 34th straight month of growth. Electronic components and ICT goods were nearly four-fifths of the shipment. Servers and related kit are on track for about 40% of merchandise exports this year. Officials lifted the 2026 GDP forecast toward 9.6%. However, the boom is not diversified. It is one industry wearing the whole economy like a coat.
This is where the PRC’s theatre is supposed to matter. If you read the People’s Daily and watch the CGTN, Taiwan is a rebel province that will starve without the mainland. If you read the order book, the same “province” is the only place that can print the silicon every government, every hyperscaler and every Chinese phone brand still needs. A war over the strait has been costed, variously, at something like US$10 trillion in the first year — more than a polite recession. Germany would take it in the teeth. So would anyone who still owns a car, a hospital, or a data centre. Beijing knows this. So do the people who price TSMC at two thousand-plus New Taiwan dollars a share.
Markets are not brave. Investors are not heroes. They are afraid of losing money. What failed, however, is the harebrained theory that you can frighten an equity market into collapse. Threats are cheap. Wafers are not. Foreigners still nervously sell when the Fed coughs. They still come back when Nvidia buys a piece of MediaTek or when August revenue prints another record. The independent fact on the ground speaks a lot louder than a UN seat. It is a foundry queue that runs through 2027 and a government in Taipei that can raise defence spending off an AI tax windfall instead of squeezing the 老百姓 .
Then, the argument arrives at dinner the way it always does. Someone who has never had to keep a search history on the PRC leans back and says, with the calm of a man reciting a bus timetable, that Taiwan would be better off under Beijing. Bigger market. Shared culture. Unify and put an end to the standoff. Yao mo gao chor ah?
Look.
Taiwan’s GDP per capita this year is in the low forties of thousands of US dollars. The mainland’s is in the mid-teens. On purchasing power the gap is ruder still. After-tax income on the island is the kind of figure that buys a life. On the other side of the strait it buys a smaller one, and a larger share of that smaller one is parked in a flat whose price has been falling for five years. Households over there keep most of their wealth in property. The property has been a slow puncture since 2021. Land-sale revenue is still sliding. This is the “upgrade package” for a unified Taiwan?
Youth unemployment on the mainland, even after the statisticians kindly stopped counting some of the young, has been hanging around the mid-teens. Taiwan’s jobless rate is about 3.4%. One side is trying to find work for 12.7 million new graduates while AI eats the internships. The other side is running an export machine so hot the customs office keeps breaking its own records. The Sinophile stops thinking and cheers along with the propagandists. But what is really happening? Banks are owned by the state. Debt goes to the government and churns in a stagnant pond. Banks dare to lend because the government is backing them. The government dares to take on debt because the banks will never dare send them repayment reminders. Businesses continue to borrow because the banks dare not turn them down.
Culture is the favourite fig leaf. Same language family, same festivals, same night-market smell if you squint. So were the two Germanys. So were the two Koreas. Shared noodles have never been a merger agreement. Taipei already trades with the mainland when the rules allow. What it does not do is outsource the police, the courts, the curriculum, and the question of who is allowed to lose an election. The proposal on the table is that the rich, smaller, louder democracy should submit to the larger machine currently asking graduates to learn to prompt. That is not “reunification” on equal terms where the smaller partner can correct the mistakes made by the bigger partner. That is a reverse takeover pitched by people who will not be in the queue.
You hear the same voice in Singapore, ironically from people who are not particularly strong in Chinese language, culture and history. China is big. Taiwan is small. History has a direction. Size is destiny. Destiny, in this telling, always travels west across the strait and never looks at a per-capita table. The island’s actual voters keep electing governments that decline the offer. The “experts” treats that as a misunderstanding. Believe Hunkle, the people who want the PRC running Taiwan do not want the same for themselves. They have simply been seduced by the facade of a prosperous and progressive economic miracle on a recent pilgrimage to the PRC.