Hong Kong has become the main artery for high-tech goods flowing in and out of China, and its chip trade has hit record levels. The city accounted for more than half of China's $239bn in semiconductor imports in the first five months of 2026, according to a Bloomberg review of official data.

That share stood at just a third a decade ago. Between January and May, Hong Kong re-exported $124bn worth of chips to the mainland, some 52% of China's total purchases.

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 is the fastest rate since 1992, outside the pandemic years.

“Hong Kong's strong air cargo network and free-port status have made it a perfect trading hub for semiconductors, which are high-value, low-weight and time-sensitive,” Natixis senior economist Gary Ng told Bloomberg. “Chipmakers can ship via Hong Kong on a frequent, stable schedule or store for future sales with flexibility.”

A $2tn trade network

The former British colony operates as a free port with no import tariffs and no capital controls, a contrast with the mainland's financial restrictions and red tape. That has made it a critical cog in the AI-driven commercial system taking shape across Asia, where governments such as South Korea are pouring hundreds of billions into chips and data centres.

Economists at HSBC estimate AI trade within Asia has doubled from pre-pandemic levels to almost $2tn in 2025. Hong Kong alone exported nearly $159bn of AI-related goods last year, according to consultancy Oxford Economics, the fifth-largest total in Asia and more than Japan.

“Hong Kong's strength lies in facilitating the movement of AI-related goods rather than producing them,” 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 research by the Hong Kong Trade Development Council (HKTDC). Barclays puts the share as high as 70%.

The council this week more than doubled its 2026 export growth forecast for the city to over 20%, citing an AI-driven “technology upcycle”. The boom helped Hong Kong's economy expand 5.9% in the first quarter, its fastest pace in almost five years.

Caught between Washington and Beijing

The middleman role cuts both ways. Hong Kong lacks the chip fabs of Taiwan and South Korea or the heft of the mainland market, leaving it exposed to the whims of the US-China chip war.

During Donald Trump's first presidency, Washington stripped the city of its special customs privileges, treating it as part of China. Since Trump returned to the White House and tightened curbs on China's access to advanced US chips, Hong Kong has ramped up purchases of American-made semiconductors, sourcing many from third countries.

Bloomberg suggests those are likely chips that fall outside the restrictions, though the data does not specify which models are moving. Asian transshipment routes have drawn growing scrutiny regardless, with US and Taiwanese authorities already probing alleged smuggling of Nvidia chips through 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 figured out a way to handle the payments,” Stanford University research scholar and former Hong Kong lawmaker Charles Mok told Bloomberg.

The geopolitical exposure is pushing the city to hunt for new markets, with Chief Executive John Lee personally leading trade missions to the Middle East, Central Asia, and Southeast Asia. His June trip to Kazakhstan and Uzbekistan yielded 96 agreements worth over $1.65bn.

For now, AI is where the growth is

Some 40% of the chips Hong Kong handles are supplied by China itself, with a fifth coming from Taiwan, followed by Singapore and South Korea. The city has overtaken the mainland as Taiwan's top chip export market, according to Bloomberg's calculations, a shift not yet visible in Taiwan's own headline trade figures.

China's own semiconductor exports soared 111% in May to $36bn, the fastest growth since 2013, even as the mainland remains a net importer of advanced chips and races to build domestic alternatives. In May alone, Hong Kong absorbed over $40bn of Chinese exports, the biggest monthly haul since 2015.

Semiconductors drove more than a third of that export value, according to Chinese customs data. For much of ocean freight, meanwhile, Hong Kong's middleman role has been fading for years as mainland ports in Shanghai, Ningbo, and Shenzhen ship goods directly to global markets.

In the highest-value trade, though, the city has held on. Its common-law courts remain more trusted by international investors than the mainland's legal system, even as Beijing tightens its political grip.

“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,” University of Hong Kong economics professor Heiwai Tang told Bloomberg. “Hong Kong still has all the institutional advantages.”

The city's aviation hub status is another edge, because the mainland enforces stricter controls on electronics carried by air. “This is something that other transshipment hubs like Singapore simply cannot do,” Nam Pak Hong Association vice chairman Michael Li Chi Fung told Bloomberg.