Booming AI Chip Trade Seals Hong Kong’s Role as Gateway to China

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Almost all of Hong Kong’s semiconductor shipments were re-exports, with more than 80% of them by value heading to the mainland, according to Bloomberg calculations based on data from Hong Kong’s Census and Statistics Department. Some 40% of those chips were supplied by China and a fifth by Taiwan, followed by Singapore and South Korea.

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Between January and May, the city re-exported $124 billion worth of semiconductors to the mainland, representing 52% of China’s total chip imports, customs data show.

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The boom helped Hong Kong’s economy expand at its fastest pace in almost five years in the first quarter, despite the global energy shock caused by the war in Iran. 

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On Tuesday, the Hong Kong Trade Development Council more than doubled its 2026 export growth forecast for the city to over 20%, citing an AI-driven “technology upcycle.”

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Research by the council shows AI-related electronics now account for 57% of Hong Kong’s exports, up from 44% in 2024. Barclays Plc puts the share as high as 70%.

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Hong Kong exempts imports from tariffs — an advantage during the tit-for-tat trade wars and export controls between Beijing and Washington. Goods that move on to the mainland, however, are still subject to Chinese taxes and duties.

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Even so, mainland firms may prefer working through Hong Kong companies because access to the city often makes payments and currency conversion easier than when dealing directly with foreign suppliers.

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“As a middleman, Hong Kong has figured out a way to handle the payments,” said Charles Mok, a research scholar at Stanford University and a former Hong Kong lawmaker who represented the city’s information technology constituency. “That makes it easier for mainland buyers.”

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The city has surpassed mainland China as Taiwan’s top chip export market, with triple-digit growth in shipments from South Korea.

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The shift has unfolded alongside China’s emergence as the world’s largest supplier of AI-related goods, even as the mainland remains a net importer of advanced chips. China’s overseas sales of semiconductors soared 111% in May, the fastest growth since 2013.

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The boom has taken Hong Kong’s trade with China to record highs. In May alone, the city absorbed over $40 billion of Chinese exports — the biggest monthly total since 2015 and roughly three to four times what the mainland shipped to Japan or Germany.

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Semiconductors drove much of the increase, according to Chinese customs data, accounting for more than a third of the export value.

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For much of ocean freight, Hong Kong’s middleman role has been in retreat for years as China built world-class ports in Shanghai, Ningbo and Shenzhen and mainland goods began moving directly to global markets. Yet in the highest-value trade, the city has held on.

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“When it comes to products that have very high intellectual property content, Hong Kong still has a role in assuring quality, verifying standards and protecting IP,” said Heiwai Tang, economics professor at the University of Hong Kong. “Hong Kong still has all the institutional advantages.”

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The city’s common-law courts, a legacy of British rule, remain more trusted by international investors than the mainland’s legal system, even as Beijing has tightened its grip on Hong Kong in recent years.

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Hong Kong’s status as an international aviation hub is another source of leverage. Mainland China enforces stricter controls on electronics carried by planes, a hurdle for AI goods shipped by air, said Michael Li Chi Fung, vice chairman of the trading group Nam Pak Hong Association.

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“With its proximity to the mainland, Hong Kong functions as a distribution hub that can seamlessly combine air and land transport,” Li said. “This is something that other transshipment hubs like Singapore simply cannot do.”

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—With assistance from Shadab Nazmi, Yujing Liu and Yian Lee.

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