The TL;DR
Hong Kong handled more than half of China’s $239bn chip imports in the first five months of 2026, a record share, as AI demand reshapes Asian trade. The city’s free port status and air freight network have made it an important semiconductor producer for the region, although the role leaves it exposed to US-China tensions.
Hong Kong has become the main artery for high-tech goods in and out of China, and its chip trade has reached record levels. The city accounted for more than half of China’s $239 billion in semiconductor sales in the first five months of 2026, according to a Bloomberg review of official data.
That share stood at just over a third a decade ago. Between January and May, Hong Kong also exported $124bn worth of chips to the mainland, about 52% of all purchases from China.
Official figures published in late June showed the city’s trade with China grew nearly 50% in May from a year earlier. Bloomberg reports that that is the fastest rate since 1992, excluding the pandemic years.
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“Hong Kong’s strong air freight network and free port status have made it an ideal trading base for semiconductors, which are high-value, low-weight and time-sensitive,” Natixis senior economist Gary Ng told Bloomberg. “Chip makers can ship through Hong Kong with a regular, stable system or keep future sales flexible.”
$2tn trading network
The former British colony operates as a free port with no import duties and no currency controls, contrary to the continent’s financial restrictions and red tape. That has made it a critical cog in the AI-driven commercial system that is sprouting up across Asia, where governments like South Korea are pouring hundreds of billions into chips and data centers.
Economists at HSBC estimate AI trade within Asia to double from pre-pandemic levels to around $2tn by 2025. Hong Kong alone exported about $159bn of AI-related goods last year, according to consultancy Oxford Economics, the fifth largest in Asia and ahead of Japan.
“Hong Kong’s strength is in the delivery of AI-related goods rather than in their production,” Oxford Economics economist Yongshi Mai told Bloomberg.
AI-related electronics now account for 57% of the city’s exports, up from 44% in 2024, according to a study by the Hong Kong Trade Development Council (HKTDC). Barclays puts the share as high as 70%.
The council this week doubled its forecast for export growth in 2026 to more than 20%, citing AI-driven “technological advances”. This growth helped Hong Kong’s economy grow by 5.9% in the first quarter, the fastest pace in nearly five years.
It is held between Washington and Beijing
The middleman role cuts both ways. Hong Kong doesn’t have the chip fabs of Taiwan and South Korea or a large country market, leaving it exposed to the whims of the US-China chip war.
During Donald Trump’s first presidency, Washington stripped the city of special cultural rights, treating it as part of China. Since Trump’s return to the White House and strengthened China’s access to advanced US chips, Hong Kong has stepped up purchases of American-made semiconductors, sourcing many from third countries.
Bloomberg suggests those are the chips likely to fall outside the limits, though the data doesn’t specify which models are going. Asian shipping routes have drawn increasing scrutiny regardless, as US and Taiwanese authorities investigate alleged smuggling of Nvidia chips into the region.
Mainland firms may also prefer Hong Kong intermediaries because payments and currency conversion are easier than dealing directly with foreign suppliers. “As a middleman, Hong Kong has found a way to handle payments,” Stanford University researcher and former Hong Kong lawyer Charles Mok told Bloomberg.
Political exposure is pushing the city to hunt for new markets, and Chief Executive John Lee is personally leading commercial activities in the Middle East, Central Asia, and Southeast Asia. His June trip to Kazakhstan and Uzbekistan yielded 96 deals worth more than $1.65bn.
For now, AI is where the growth is
About 40 percent of Hong Kong’s chips are supplied by China itself, while the fifth comes from Taiwan, followed by Singapore and South Korea. The city has overtaken the mainland as Taiwan’s top chip export market, according to Bloomberg statistics, a change not yet reflected in Taiwan’s main trade statistics.
China’s semiconductor exports rose 111% in May to $36bn, the fastest growth since 2013, as the continent continues to import advanced chips and chips to build domestic alternatives. In May alone, Hong Kong absorbed more than $40bn of China’s exports, the biggest monthly activity since 2015.
Semiconductors drove more than a third of this export value, according to China customs data. Among the many goods transported by sea, on the other hand, the central role of Hong Kong has been declining for many years as the major ports of Shanghai, Ningbo, and Shenzhen move goods directly to world markets.
However, in the high-value trade, the city is still standing. Its official courts remain more trusted by international investors than the mainland’s legal system, as Beijing strengthens its political power.
“When it comes to products with a very high intellectual property content, Hong Kong still has a role in quality assurance, certification standards and IP protection,” University of Hong Kong economics professor Heiwai Tang told Bloomberg. “Hong Kong still has all the advantages of an institution.”
The state of the city’s airport is another edge, because the country enforces strict controls on electronics carried in the air. “This is something that other transit hubs like Singapore cannot do,” Nam Pak Hong Association vice chairman Michael Li Chi Fung told Bloomberg.
