TAIPEI – Taipei-based banking officer Stanley Kuo’s aspirations are, in his own words, typical: work in the bustling capital in northern Taiwan for some years, then return to his native Kaohsiung in the south to buy his first home.
But property prices have soared so much, even in Taiwan’s traditionally cheaper south, that this dream feels increasingly out of reach for the 36-year-old.
In Kaohsiung’s Nanzih district, for instance, housing prices have jumped by 89 per cent since 2020, according to data from local real estate company H&B Housing.
The booming property market in Kaohsiung – the largest city in southern Taiwan – can be attributed to the burgeoning semiconductor industry there, whose highly paid engineers have the ability to afford eye-watering housing prices.
It is not just in Kaohsiung.
Across the island, wherever major chip fabrication plants, or fabs, are located or being built, data shows that the prices of housing projects in their vicinity shoot up. This trend applies to even the more remote areas of the cities and counties of Hsinchu, Taichung, Tainan and Chiayi, where many of Taiwan’s high-tech industrial parks are located.
There was a surge in growth in the semiconductor industry during the Covid-19 pandemic from 2020 to 2023, when there was a sudden rise in demand for chips worldwide to power remote workforces.
More recently, the global semiconductor sector is experiencing robust growth again, driven by soaring demand for cutting-edge chips that are crucial for applications such as artificial intelligence (AI), internet of things, 5G and autonomous vehicles.
Housing prices in Taiwan’s newer fab sites began soaring in 2022, and realtors expect them to rise further in the near future amid sustained demand for AI chips.
But this surge has also contributed to Taiwan’s widening wealth gap, causing growing unhappiness among those outside the chip sector as they are priced out.
Associate Professor Shane Su from the Department of Economics at National Taiwan University said: “The biggest factor for Taiwan’s widening wealth gap is housing inequality. With property prices skyrocketing across the island, it is going to be increasingly difficult for many younger buyers to break into the housing market.”
Mr Kuo, the banking officer, said he has never considered buying an apartment in Taipei as it has always been beyond his budget, but he is now wondering if he will be able to purchase a home even in the outskirts of Kaohsiung.
“I admire those who work in the semiconductor industry – they’re doing important work – but I’m worried about my future,” he said.
Taiwanese media call it the “TSMC effect”, in reference to the Taiwan Semiconductor Manufacturing Company, the world’s largest contract chipmaker and the island’s most profitable firm.
Ms Hsu Chia-hsin, H&B Housing’s executive director for research, said: “When TSMC builds a fab at a site, it’s not just the establishment of a single company there, but also the entry of upstream and downstream chip suppliers.
“That results in an influx of high-income earners to the area, so property developers and investors always regard TSMC as a bright beacon for the housing market.”
In the case of Kaohsiung, demand for new luxury housing has been strong ever since TSMC started construction of its first fab there in 2022, which is set to begin mass commercial production of advanced chips in 2025.
Construction of a second fab is scheduled to be completed in 2025, while a third facility is expected to be completed a year later. The company is also on track to begin building its fourth and fifth Kaohsiung fabs later in 2025.
The chip sector’s economic impact on the housing market has long been evident in Hsinchu city and county, home to the famed eponymous industrial park, synonymous with Taiwan’s chip sector.
Besides TSMC, Taiwan’s other chipmaking giants such as United Microelectronics Corporation and MediaTek also run massive factories there.
In Hsinchu county’s rural Baoshan township, whose reservoirs supply water to the industrial park’s foundries, housing prices have surged by 120.7 per cent in four years. In 2020, the average price there of one ping, a unit equivalent to around 3.3 sq m, was NT$135,000 (S$5,500); by the end of 2024, it had more than doubled to NT$298,000.
Chip engineers typically earn salaries significantly higher than average in an industry where profit margins are high, but they are now earning even more through huge bonuses, thanks to record-breaking profits.
In the first two months of 2025, TSMC’s revenue climbed 39.2 per cent year on year, spurred by demand for its advanced chips that power AI applications.
While Taiwan’s overall average annual income in 2023 was NT$701,000, or around NT$58,416 per month, the average annual income of those working in Hsinchu city reached NT$1.52 million.
Back in 2018, the island’s average annual income was NT$670,000, while in Hsinchu city, it was NT$1.3 million.
Salaries for most workers outside of the chip sector have stagnated for years, with real wages growing by an annual average of just around 1 per cent over the past decade.
Assistant Professor James Chen, an international relations and trade expert at Taiwan’s Tamkang University, said: “The small group of people who work in high-tech industries may be getting good pay bumps, but that’s not the case for the majority of Taiwanese. These tech workers are in the 90th percentile.”
Taiwan’s household wealth gap has nearly quadrupled in 30 years, with the richest 20 per cent of households holding 66.9 times more wealth than those in the bottom 20 per cent in 2021, according to the latest data available.
“Increasing wage differences across sectors have also led to wealth inequality,” Prof Su said. “The chip industry is at the forefront of Taiwan’s technology-driven economy, and that has led to a large disparity in income and wealth.”
The government has attempted to make it easier for young Taiwanese to purchase a home, giving first-time buyers preferential interest rates while raising taxes on multiple-home ownership.
But without sufficient savings for a down payment, people like Mr Kuo say this leg-up is not enough.
“I don’t want to become a fang nu,” he said, using the slang to describe those who feel burdened by mortgages. The Mandarin term literally means “house slave”.
Mr James Liao, who used to be a financial manager at MediaTek in Hsinchu, said that for the chip sector workers who can afford new homes, house-hunting is often considered a trendy activity.
Comparing notes on new housing developments is standard water-cooler talk, and tech workers would visit property showrooms during their time off.
“For practical reasons, you want to buy a nice house to be near work because the chip sector requires you to be on call 24/7,” said the 48-year-old, who is now the chief executive of healthcare company Taichan.
“At the same time, everyone else around you is talking about the great investments they’ve made in property, so you want to get in on that,” he said.
- Yip Wai Yee is The Straits Times’ Taiwan correspondent covering political, socio-cultural and economic issues from Taipei.
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