Taiwan has a complete suite of components and equipment to build these devices, as well as the global recognition that its supply chain will react to widespread consumer demand, according to people in the tech sector.

“You can see AI is still booming, and AI PC makers are trying to prepare,” said James Hsieh, assistant vice-president of AcBel Polytech. His firm makes power supplies and he has a 300-watt model that he believes will best handle increased power for AI computations such as GPT commands.

“I have to gather some research for marketing, otherwise we are out of date,” he said.

Taiwan’s trade data already reflects the rising global popularity of AI-optimised consumer electronics.

Exports in the first four months of the year expanded by 10.6 per cent over the same period in 2023, the Ministry of Finance in Taipei said. The biggest gainers in percentage terms were in the hi-tech hardware sector.

The ministry had reported monthly losses in export value for most of last year due to a post-pandemic decline in demand for PCs and smartphones.

The island has shipped tech gear to the world for half a century, becoming the go-to place for the parts and manufacturing of devices designed in California’s Silicon Valley.

Taiwan’s first-quarter GDP growth rose by a “stronger-than-expected” 6.51 per cent, year on year, “largely driven by net exports”, ING said in an April 30 research note.

Supplies start with processors including a pro-AI, power-saving type called neural processing units, or NPUs. Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker with much of its most advanced technology, takes orders for processors often designed by American giants such as Intel.

“Semiconductor manufacturers such as TSMC are definitely critical suppliers of advanced chips used in AI PCs,” said Sanesha Huang, an analyst with the Taipei-based market research firm TrendForce.

Developers of cooling systems, power supplies, connectors and chassis for larger computers said this week that they were studying how to adapt to AI-optimised PCs.

More power will be needed, AcBel’s Hsieh explained – NPUs will have to be cooled, memory should be added, and the chassis may need a redesign to accommodate changes on the inside.

05:06

William Lai sworn in as new Taiwan leader amid pledge to keep status quo across the strait

William Lai sworn in as new Taiwan leader amid pledge to keep status quo across the strait

“The production of hardware components such as motherboards, graphics cards and memory modules is one of [Taiwan’s strengths], as well as its extensive capabilities in assembling and manufacturing electronic devices,” Huang said.

AI PC euphoria dominated the annual Computex Taipei trade show this month. Lines of buyers formed outside the gates as seas of heads surrounded product demonstrations held by Taiwanese PC developers Acer, Asustek and MSI, who said their devices would reach mass markets between late June and year’s end.

Show demos featured PC keys that launch GPT programmes in a single stroke and software that creates photo-like images based on user commands. Some machines added augmented-reality features or boasted battery life of up to 18 hours.

A speech on June 2 by Nvidia’s Taiwan-born CEO, Jensen Huang, followed by an autograph-signing frenzy on Tuesday gave more credence to the technology and contributed to what many of the 1,500 exhibitors called a larger-than-usual crowd size. The show organiser expected 50,000 attendees.

Huang said Nvidia, a designer of graphics processing units, would use its architecture to build “AI factories” for generative AI breakthroughs.

Microsoft, which has released the Copilot+ software for AI PCs, expects 50 million of those units to be bought through May 2025. Against that target, Taiwanese suppliers will be “the ones driving the scale”, said Mario Morales, group vice-president for semiconductor research with US-based market analysis firm IDC.

Acer, ranked as the fifth-largest PC vendor worldwide by market share, expects its Swift 14 AI laptops to launch this month or next with Copilot+, chief operating officer Jerry Kao said.

“There were questions about the PC’s future after Covid-19,” Kao said on the Computex sidelines. “Right now, with the AI topic, I have a high confidence level that demand will be high for the next few years.”

The staff of 70 people at Guanghsing Industrial is studying how to keep AI processors cool in larger computers made for data centres, manager Gary Hsu said. “AI needs a refrigerator,” he quipped at his Computex display – one of dozens operated by smaller Taiwanese hardware firms that have been around for decades.

Battery cells, which come mainly from Japanese manufacturers, are about the only components that Taiwan’s supply chain finds hard to obtain, said Angela Huang, an analyst with the Taipei-based Market Intelligence & Consulting Institute.

US laws ban Taiwanese firms that sell sensitive hi-tech gear such as advanced chips to American customers from doing the same in mainland China, and industry bellwethers such as TSMC have diversified factories away from Taiwan against the spectre of a conflict with the mainland that would make those parts hard to reach for overseas customers.

“We are quite sensitive about any of these geopolitical issues,” said Kneron CEO Albert Liu, whose firm designs AI chips that save power. “It’s even more difficult than AI.”