A boom in Taiwan’s artificial intelligence stocks is creating more ways for investors to profit from its chip supply chain, making things tougher for early-stage startups.
Taiwan’s benchmark Taiex index has risen more than 50% this year, surpassing South Korea’s Kospi index and becoming the world’s best-performing major index.
Those gains extend far beyond TSMC, encompassing chip design, advanced packaging, networking and server companies. About 7% of Taiwan-listed stocks have doubled this year, compared with 3% in South Korea.
This wider exposure has made Taiwan a top choice for AI deals in Asia.
A Bank of America survey in September found that 35% of fund managers expected Taiwan to benefit the most from the next phase of the AI cycle, tied with the United States. Only 5% chose South Korea.
For startups, the allure of these public market returns can reshape financing calculations.
For Anderson Chen, founder and CEO of Operon Solutions, a Y Combinator-backed industrial artificial intelligence startup, calculus is part of the equation that shapes his approach to fundraising.
Chen said he chose to raise Opon’s $700,000 in seed funding primarily from Silicon Valley investors, leaving room for Taiwanese friends and family to participate.
“The semiconductor market is so good, you can get 10x returns from the stock market,” Chen told Business Insider.
In his view, even if a new startup’s IPO succeeds, it may only bring two to three times returns to investors.
Looking for the first check
This creates challenges for startups trying to build Taiwan’s next generation of winners.
Caleb Chu, an early investor and founder of Nova Studio in Taiwan, told Business Insider that the rising stock market has attracted many Taiwanese investors to listed stocks and away from venture capital and new startups.
Findit, a platform commissioned by the government to track Taiwan’s entrepreneurial ecosystem, found that seed and angel round financing accounted for 38.4% of investment deals by Taiwanese venture capital companies in 2021. By 2024, this proportion has dropped to 17.1%.
In comparison, the number of Series B and Series C transactions in 2024 was 39, accounting for 29.1% of the total number of transactions.
Chu said Taiwanese investors are increasingly favoring Series B, Series C and pre-IPO companies because the path to reward for these companies is clearer.
Private equity funds face related but different pressures. A March report from KPMG Taiwan said TSMC’s strong share price had a “crowding-out effect” on private equity funds, as investors preferred liquid public AI stocks to funds with longer lock-up periods and less certainty of exit.
U.S. venture capital data show a different mix, although still uneven.
Early-stage deals will be more beneficial for artificial intelligence startups than their non-artificial intelligence peers in the first quarter of 2026, PitchBook and the American Venture Capital Association said. In another report, they found that 87.5% of U.S. venture capital investments in the first half of the year had financing amounts of $100 million or more.
“When you look at statistics around the world, you see that the world is leaning towards the early stage because investors realize it can generate higher returns. The opposite is true in Taiwan,” Chu said.
For founders, this may mean finding early support abroad.
Operan’s Chen said that with the help of Taiwan’s technical talent and semiconductor expertise, financing has generally become easier for Taiwanese high-tech startups seeking overseas capital.
His startup’s $700,000 seed round closed in three days.
“In general, fundraising has become easier, but that may not necessarily be the case in Taiwan,” he said.