Taiwan is on track to set new records in chip production and technology development, driven by steady global demand related to AI. The island is an indispensable part of the global electronics supply chain, doing much of the semiconductor design, fabrication, packaging, and test for global brands ranging from Apple to Toyota. In addition, the domestic ecosystem can supply parts such as capacitors and printed circuit boards, as well as complete servers for AI data centers.
Yet Taiwan faces limits to its success. The resource-constrained island is stretching power and water resources to meet demand for production. Government and industry are working to prevent potential shortages of tech workers. Given these unknowns as well as potential new Section 232 tariffs from the U.S. government and geopolitical issues stemming from the ongoing tech war between the U.S. and China, Taiwanese electronics manufacturers have taken de-risking measures by pursuing more overseas partnerships and investment.
EE Times interviewed top government officials in Taiwan for this report. They see the electronics industry taking the initiative to meet challenges and set the next stage for growth. Our report examines Taiwan’s electronics workforce, semiconductor manufacturing, power electronics, embedded systems, AI, and edge computing.
Workforce
In 2025, Taiwan faced an expected shortage of 34,000 workers in its world-leading semiconductor industry. Other nations rebuilding their chip industries in the U.S., Germany, and Japan expect similar shortages.
To address its domestic problem, Taiwan’s government is focusing on the education of multidisciplinary technologists to meet emerging design challenges, according to the National Science and Technology Council (NSTC). The NSTC plays an inter-ministerial role. It forms science and technology policies, funds academic research, and oversees the island’s science parks, where most of the chips are made.
“Taiwan urgently requires multidisciplinary professionals who can simultaneously master hardware-software co-design, thermal management, and system-architecture planning,” NSTC Minister Cheng-Wen Wu said. He is an electronic engineer with a Ph.D. from the University of California at Santa Barbara.
To address these technical pain points and fill critical talent gaps, the NSTC is advancing the High-Performance Chip Key Technologies and Innovative Applications Program (CbI), focusing on tech research and development (R&D) for high-performance chips and advanced chip manufacturing.
Started in 2024, CbI is a 10-year, NT$300 billion (US$9 billion) government program to maintain Taiwan’s global leadership in chips by integrating AI, fostering international collaboration, developing talent, and spinning off innovation in biomedicine, agriculture, and advanced chip packaging.
The NSTC program is helping academia form cross-disciplinary teams to conduct integrated R&D in areas such as system architecture, high-speed interconnect, and heterogeneous-integration platforms. The program has invested in 16-nm and 7-nm FinFET process design and 2.5D/3D packaging technologies.
Taiwan is also working globally on workforce development. In addition to TSMC, which is transferring leading technology to teams of workers at the foundry giant’s new facilities in the U.S., Japan, and Germany, Taiwan has joined with Germany through an academic collaboration in advanced chip design. Other projects are underway in the U.S. and the United Kingdom.
Taiwanese companies are also coordinating with overseas firms to expand in Asia. In 2024, India’s Tata Electronics and Taiwan’s Powerchip Semiconductor Manufacturing Co. announced plans to build one of the first chip facilities in India.
“These international collaborations not only expand business opportunities for Taiwan’s semiconductor industry but also serve as a strategic response to competition from China or the United States,” said Chyou-Huey Chiou, director general of Taiwan’s Industrial Development Administration (IDA). The IDA’s main role is to promote Taiwan’s industrial development.
Chiou expects more overseas expansion by Taiwan’s chipmakers. “The Taiwan semiconductor industry will consolidate its domestic R&D and manufacturing base while simultaneously expanding its overseas footprint to improve transnational collaboration and operational capacity,” he said.
Semiconductor manufacturing
Taiwan includes top chip foundry TSMC and a host of other chipmakers supplying everything from logic and memory to wide-bandgap devices and parts for satellite communications. In chip design, there’s global giant MediaTek and others that are leading designers of display drivers and networking devices. At the back end of the ecosystem, Taiwan’s ASE Group, the world’s top chip packager, is one of many assembly-and-test providers on the island.
The government takes a holistic approach toward industrial development.
“Taiwan aims to ensure that AI-assisted design and intelligent manufacturing capabilities serve not only large foundries and integrated device manufacturers but also diffuse to domestic small and medium-sized IC design companies and supply chain partners, establishing a critical foundation for Taiwan’s semiconductor industry to advance,” NSTC Minister Wu said.
The NSTC supports AI-integrated smart factory demonstrations and tech R&D. Through its tool platforms and industrial testbeds, the NSTC facilitates transitions from research laboratory to commercial production. The aim is talent cultivation and lower adoption barriers for small and mid-sized companies.
NSTC efforts have yielded chips for cancer screening, atrial fibrillation detection, Parkinson’s digital therapeutics, and residue detection in agriculture.
Power electronics
Taiwan’s ecosystem of power electronics companies ranges from fabless startups to established foundries, including Episil Technologies, Hon Young Semiconductor, Mosel Vitelic, Win Semiconductors, and Vanguard International Semiconductor. Some make devices for electric vehicles (EVs) and smart grids.
Last year, Taiwan’s United Microelectronics Corp. (UMC) and U.S.-based Polar Semiconductor agreed to collaborate on providing a secure supply of power electronics for automotive, data center, consumer, and aerospace and defense applications. UMC is a long-standing supplier of chips to Germany’s Infineon Technologies AG, especially in automotive microcontrollers and power management devices.
Taiwan is also building competitive advantages in compound semiconductors, according to NSTC Minister Wu.
Since 2022, the NSTC has promoted the Next-Generation Compound Semiconductor Program, focusing on R&D for key materials, epitaxy, devices, and process technologies for high-frequency and high-voltage compound semiconductors.
The program emphasizes international partnership. Taiwan’s program research teams are collaborating with Nobel Prize Laureate Hiroshi Amano and his team at Nagoya University in Japan as well as Chalmers University of Technology in Sweden, focusing on high-frequency gallium nitride (GaN) materials, epitaxy, processing, and metrology. Under the NSTC program, other work is underway with the U.S. National Institute of Standards and Technology and the University of Bristol in the U.K.
“Taiwan will continue to advance the R&D of compound semiconductor devices, modules, and systems while striving to achieve domestic capabilities in GaN-on-X and 8-inch, and even 12-inch, SiC [silicon carbide] substrate technologies,” NSTC Minister Wu said. “Taiwan is actively positioning itself in emerging materials such as Ga2O3 and diamond, as well as in heterogeneous integration.”
The NSTC plans to launch the Advanced Research Program on High-Performance Compound Semiconductors in 2026 to meet common requirements of EVs, smart grids, and renewable-energy power conversion systems. The aim is to develop high-reliability WBG semiconductor and module technologies for emerging applications.
“Taiwan will develop high-voltage packaging, thermal design, and isolated gate driver technologies to enhance module robustness under fast-switching, high-current-pulse, electromagnetic-interference environments and high-frequency power conversion conditions, thereby improving Taiwan’s competitiveness in applications such as electric vehicles, smart grids, and renewable-energy power conversion systems,” NSTC Minister Wu said.
Embedded systems
Taiwanese companies such as Getac, a joint venture with GE Aerospace, specialize in embedded systems, including ruggedized laptops designed for demanding environments. Another company, Advantech, is a world leader in industrial PCs and IoT systems. Still, more companies focus on factory automation, medical systems, transportation, and military/ aerospace. Looking to the future, the Taiwanese government and electronics companies are building a satellite industry.
Taiwan is tracking a shift from single chips to systems and solutions.
“Taiwan can strengthen its downstream system integration and mass-production capabilities,” Chiou said. “Beyond AI servers, data centers, and networking equipment, we must accelerate the development of terminal systems such as drones and robotics. By combining our existing advantages in chip manufacturing to develop chips and modules for sensing, communications, edge computing, power, and thermal management, we can create exportable complete solutions.”
Tron Future is one example of a Taiwanese company that’s expanding into new types of embedded systems. The company designs chips and integrates them into phased-array radars, part of anti-drone systems for defense and aerospace.
Tron Future is working with Taiwanese chipmakers TSMC and Win Semiconductors to make solutions that can cut the costs of existing systems by more than 50%, according to company founder Yu-Jiu Wang.
“Almost every country is starting to build anti-drone systems,” Wang said. “For an anti-drone system, you need to buy relatively low-cost radar, which cannot be provided by conventional defense suppliers, because those systems are way too high-priced. This provides a niche opportunity to provide our solution to that market.”
Beyond the defense business, the company is developing a communication payload, including phased-array modems and switching for a satellite constellation, Wang said.
Taiwan’s tech industry has joined a national effort to build satellites. With commercial satellite launches soaring globally, the business looks poised for growth.
The island’s tech capabilities “map directly onto key satellite subsystems, including on-board computers, communication payloads, antennas, and power management systems, as well as thermal and structural components,” said Elvin Liao, a department director at the Taiwan Space Agency (TASA). Taiwan is in the third phase of its space program, which started in 2019.
Formosat-8 is a satellite constellation under the third phase, supervised by the NSTC and executed by TASA. The constellation consists of six high-resolution satellites and two ultra-high-resolution satellites. The first, Formosat-8A, was launched in late 2025. The program emphasizes lightweight, low-cost platforms suitable for serial production.
In 2024, Taiwan’s space business exceeded NT$292.5 billion (US$9.75 billion). The island competes over reliability, manufacturability, and trusted supply chain integration, Liao said.
“While Taiwan can already design and manufacture most satellite bus subsystems domestically, certain high-end sensors, radiation-hardened components, or highly specialized payload elements may still be sourced from trusted international partners,” Liao said.
AI and edge computing
The global surge in the expansion of AI data centers and the wider application of AI will be a tailwind for Taiwan over the next five years, according to the IDA. Taiwanese companies such as Hon Hai, Quanta, Wistron, and Inventec supply an estimated 90% of the world’s AI servers.
Taiwan’s supply chain for servers and edge devices has played a key role in meeting global demand for AI and increased digitalization, according to Chiou.
The island maintains and strengthens its status in the global tech industry by positioning itself as the “premier partner,” Chiou said, describing the role that Taiwanese companies generally play as contract manufacturers and system integrators for large global brands such as Apple and Google.
Taiwan makes AI processors for Nvidia and AMD. Taiwan is also using AI to make semiconductors.
“In Taiwan, leveraging its complete wafer manufacturing and assembly/test clusters, AI is viewed not only as a technical tool for enhancing capacity and yield but also as a key nexus connecting design optimization, predictive reliability modeling, and intelligent manufacturing decision-making,” NSTC Minister Wu said. “AI has begun to participate in multiple stages of EDA tools, from architecture exploration and design space search to power and thermal analysis for multi-die and advanced packaging configurations.”
To strengthen Taiwan’s overall AI capabilities, the NSTC has conducted programs and cross-ministerial collaborations spanning design tools, intelligent manufacturing, and talent cultivation.
Taiwan is building the future. Efforts are underway by companies such as Apple supplier Hon Hai to make industrial robots and autonomous cars. In November 2025, Hon Hai and U.S.-based Intrinsic announced that their U.S.-based joint venture aims to shift from product-specific automation solutions to more general-purpose intelligent robotics.
Collaboration works in many ways. U.S.-based defense-tech maker Anduril late last year announced that it is expanding its presence in Taiwan, partnering with Taiwan’s National Chung-Shan Institute of Science and Technology (NCSIST) for joint production of AI-driven autonomous weapons such as the Barracuda-500 missile and underwater drones.
NCSIST is active in the development, manufacturing, and sustainment of various weapons systems and dual-use technologies, including drones.
Anduril is delivering its Altius drones for Taiwan’s defense while the partners aim to strengthen the island’s industrial base. The U.S. company, which opened an office on the island in late 2025, said at the time that it aims to tap Taiwan’s engineering talent and chip industry for advanced defense solutions.
Source：EE Times