Traditional industries see limited AI gains as K-shaped economy widens: Expert

Taipei, Sept. 26 (CNA) While Taiwan is benefiting from a global artificial intelligence (AI) boom, many traditional industries have seen little of the benefit, widening the country's "K-shaped" economic divide, an economist said.

In a recent interview with CNA, Ju Haw (朱浩), head of the Commerce Development and Strategy Research Division at the Commerce Development Research Institute, described a "K-shaped" economy as one in which some sectors expand rapidly while others struggle.

In Taiwan's case, high-tech and AI-related industries have continued to grow while traditional industries have come under increasing pressure.

Crowding-out effects

Ju said AI development has created crowding-out effects, as large high-tech firms generating strong profits are better able to attract investment, skilled workers and energy resources, including renewable energy.

Traditional industries, by contrast, face high barriers to transformation because they lack resources such as capital and manpower, he said.

As capital continues to flow into AI-related industries, the gap between the technology and non-technology sectors has widened, exacerbating the country's "K-shaped" economic development, Ju said.

Taiwan has faced an unusual economic landscape in which AI development continues to boost GDP growth, while the headline growth rate masks uneven wealth distribution because the benefits of AI have yet to reach the broader business community and the general public, he said.

Citing strong export performance, the Directorate-General of Budget, Accounting and Statistics forecast in late August that Taiwan's GDP would grow 11.05 percent in 2026, following an 8.76 percent increase in 2025.

Data compiled by the Taiwan Stock Exchange and Taipei Exchange, which operate Taiwan's main board and over-the-counter market, respectively, showed that average annual pay at listed semiconductor firms totaled NT$2.58 million (US$81,000) in 2025, compared with NT$543,000 in the tourism sector. The difference was 4.75-fold.

Pressure on traditional industries

FDC International Hotels Corp. President David Ding (丁原偉) said rising labor and food costs have led many hospitality firms to target higher-end customers, while others have been forced out of the market because of labor shortages and shrinking profit margins.

Jay Shane (謝智通) of furniture brand Shane Global Holding Inc. said 2026 has been a difficult year for the global furniture industry, as investment has continued to flow into AI-related industries and into the booming stock market.

Furniture suppliers have also faced pressure from U.S. tariff policies, inflation and weakening demand, he said.

However, Lin Chia-hsien (林家賢), head of the distribution division at bookstore chain Eslite Spectrum Corp., said AI development has helped boost consumption, allowing the retail industry to share in some of the benefits.

According to Lin, visits to Eslite stores have increased by about 10 percent from a year earlier so far this year.

Traditional industries urged to use AI

In response to the difficulties facing traditional industries, Ju said they do not need to transform themselves into technology companies but should use AI applications to create higher-value products and services.

For example, he said, a screw supplier should not simply sell screws but combine manufacturing capabilities, software and services to transform itself from a basic product supplier into a higher-value solutions provider.

Ju added that the government should allow traditional-industry companies to rent or share AI infrastructure, lowering the barriers to AI adoption for small and medium-sized enterprises seeking to upgrade production.