The governor of the Central Bank of Taiwan, Yang Chin-long, told the country's parliament today that whilst the growth driving AI is real, the entire industry runs the risk of bursting into a bubble.
AI has become Taiwan's main economic driver, but the central bank will closely monitor the risks associated with speculative capital investments financed by the "aggressive" borrowing of technology firms, according to Reuters.
At the central bank's quarterly meeting in June, its board did not consider the inflationary pressures arising from the AI boom to be sufficient to justify an interest rate rise, although the decision to keep rates unchanged was not unanimous. However, following a reassessment of the sector's volatility, it appears that the central bank's chief's view has changed, or at least shifted towards caution.
Jensen Huang, CEO of Nvidia, frequently travels to the island - one of the main hubs for the manufacture of AI chips - and remains optimistic about the future outlook, despite the meteoric rise in the cost of materials.