Taiwan’s central bank governor, Yang Chin-long, used a parliamentary hearing last Thursday to say the quiet part out loud. The AI boom, he told lawmakers, has become a major driving force in Taiwan’s economy — and that is exactly what worries him. “We do have concerns about the possibility of an AI bubble,” Yang said. “AI is driven by real growth potential, but it’s the possibility of over-expansion via over-leveraging that concerns us.” Central bankers are paid to be boring. This one just named the risk the market has spent a year talking around.
The specific worry is debt. Yang pointed to speculative capital expenditure financed by aggressive corporate borrowing across the tech sector — the exact machinery powering the build-out. That is not an abstract concern for Taipei. Taiwan sits at the center of the global AI supply chain, anchored by TSMC, whose customers include Nvidia and Apple and whose shares have dragged the island’s stock market to record highs. When the bank met in June, it held interest rates steady — a decision that, notably, was not unanimous — judging that AI-driven price pressure did not yet justify a hike. Translation: the people who set Taiwan’s rates are staring at the same charts as everyone else, and not all of them are comfortable.
What lifts this above a soundbite is the company Yang is keeping. Weeks earlier, the Bank for International Settlements — effectively the central bank for central banks — used its 2026 annual report to warn that the roughly $1 trillion wave of AI investment could be heading for a reckoning, citing thin policy room and the role of private credit. Two of the most conservative institutions in global finance, within a month of each other, are pointing at the same thing: not whether AI is real, but whether it is being paid for with too much borrowed money. That build-out is visible in the deals we cover every week — Amazon selling at least $25 billion of bonds to fund AI capex, Anthropic signing a $19 billion, 20-year power lease with a bitcoin miner. Individually, each is rational. In aggregate, it is leverage.
Our take: The warning matters less for what it says than for who is saying it. A hedge-fund short-seller yelling “bubble” is noise; a central bank governor in the country that manufactures the world’s AI chips saying it is signal. Yang has every reason to cheer the boom — it is the best thing to happen to Taiwan’s economy in years. That he is flagging over-leverage anyway is the tell. This is not a crash call. It is a reminder that the AI trade has quietly become a credit trade, and credit trades break in a particular way: not when the technology disappoints, but when the financing does.
What to watch
- The debt, not the demand. TSMC still says orders are strong. The risk isn’t chip demand cooling — it’s whether the borrowing behind the data centers can be refinanced if rates or sentiment turn.
- Split rate votes. Taiwan’s next policy meeting is the place to watch for a divided board hardening into a hike — a small move that would carry an outsized signal about official nerves.
- Who echoes it. The Fed has already begun treating AI as a monetary-policy variable. Watch whether a G7 central banker uses the word “bubble” on the record next.
- Private credit. The BIS singled it out for a reason. If one large AI-infrastructure lender wobbles, that is the domino Yang is worried about.
For two years the bull case and the bear case have argued over the same question — is the technology real? Yang Chin-long just changed the question. The technology is real; his central bank says so. What’s uncertain is the balance sheet underneath it. Taiwan makes the chips, counts the money, and just told the world it is watching the leverage. Everyone building on borrowed billions should assume someone else is watching too.