30-Second Overview: Taiwan, through TSMC's manufacturing of NVIDIA AI chips, occupies a critical position in the global AI hardware supply chain. After the generative AI explosion in 2023, Taiwan shifted from "making chips for others" to thinking "how to use AI" — the government promoted four AI strategies, but seven in ten enterprises have yet to cross the AI adoption threshold. Taiwan is in the process of transitioning from hardware OEM toward AI application innovation.
When ChatGPT burst onto the scene in late 2022, many Taiwanese may not have realized that the hardware foundation supporting this AI revolution was largely "Made in Taiwan."
TSMC's AI Chip Empire
The story starts with TSMC. When NVIDIA launched its RTX 30 series GPU in 2020, TSMC's 7nm process technology was indispensable to that effort. When NVIDIA's H100 AI chips were in short supply in 2023 due to ChatGPT's explosion in popularity, TSMC was once again the behind-the-scenes enabler.
This was no accident. TSMC began deep collaboration with NVIDIA as early as 2016, investing in the most advanced process technologies. At the time, many felt AI was still too distant, but TSMC bet correctly.
In 2024, TSMC's AI-related revenue exceeded 50% of total revenue. Not just NVIDIA — AMD, Broadcom, Marvell, and other major AI chip companies all depend on TSMC's manufacturing technology. It can be said that without TSMC, there would be no today's AI wave.
But this also prompted Taiwan to reflect: are we just making chips for others, or do we want to develop our own AI capabilities?
From OEM Thinking to Application Innovation
After ChatGPT sparked a global AI frenzy in 2023, Taiwan's government and enterprises began seriously considering AI strategy.
The Executive Yuan launched the "Four AI Strategies" in 2024: expand computing power, link to application fields, attract talent, and demonstrate applications. In plain language: build AI computing centers, find AI application scenarios, cultivate AI talent, and promote AI adoption across industries.
But actual implementation revealed enormous challenges. According to a 2025 enterprise survey, 70% of Taiwan's businesses have not genuinely adopted AI. The main reasons are entirely practical: not knowing how to use it, no data, no talent, too costly.
This reflects one characteristic of Taiwan's industries: hardware is very strong, software is relatively weak. We can make the world's most advanced chips, but we are not necessarily able to use AI to solve business problems.
Taiwan's Medical AI Story
However, there are success stories. Medical AI is a relatively well-developed field in Taiwan.
AIdea (Acer's medical AI brand) and Acer's AI medical division, as well as Acer Smart City Technology, have developed AI systems in this space. More notably, Acer has developed an AI system for diabetic retinopathy detection that can interpret fundus photographs in 30 seconds with accuracy exceeding 90%.
The AI pathological imaging system developed by Aifeel Technology (formerly known as Quanta AI) can automatically read and interpret cancer pathology sections with accuracy comparable to experienced physicians. This system has been adopted at top medical centers including National Taiwan University Hospital and also received US FDA certification.
Why has medical AI taken hold in Taiwan? Several key factors: first, Taiwan has a world-class medical system. The National Health Insurance system has allowed Taiwan to accumulate large quantities of high-quality medical record data. Second, Taiwan's physician training is rigorous, making AI system reference answers relatively reliable. Finally, Taiwanese physicians are relatively open-minded and willing to try new technologies.
Another company, Acer Smart City Technology, has made breakthroughs in diabetic retinopathy detection. Their AI system can interpret fundus photographs in 30 seconds with accuracy exceeding 90%. This is especially helpful for rural medicine — without needing a specialist, a general clinic can provide specialist-level diagnosis.
The Manufacturing Sector's AI Experiments
Taiwan's manufacturing sector is also attempting AI transformation, but progress is uneven.
Delta Electronics is a relatively successful example. They introduced AI quality inspection systems at their Thai factory, using machine vision to inspect circuit board defects. Previously this required manual visual inspection; now AI can work 24 hours without rest and is more accurate than the human eye.
Foxconn is also promoting AI factories, using AI to predict equipment failures and optimize production schedules. But Foxconn's scale is enormous, implementation progress varies by factory, and effects are still being evaluated.
Relatively speaking, AI adoption is more difficult for SMEs. Lack of resources, no specialized talent, not knowing where to begin — these are common problems. Although the government has subsidy programs, the application process is complex, and SMEs often shy away from the burden.
The Conservative Camp in Financial Services
Taiwan's financial sector takes a relatively conservative approach to AI, primarily concerned about risk management.
Still, some experiments are underway. E.Sun Bank developed an AI customer service system that can answer general banking questions. CTBC Bank uses AI to analyze credit risk, improving loan decision accuracy.
But overall, Taiwan's financial sector's AI applications remain somewhat superficial, mostly staying at the chatbot customer service stage. The truly core AI applications — such as algorithmic trading and risk modeling — have not yet been deployed at large scale.
This may be related to the conservative culture of the financial sector, as well as a relatively strict regulatory environment. Issues of AI decision explainability and fairness are particularly sensitive in financial services.
The Talent War
AI talent is currently Taiwan's biggest bottleneck.
According to job market statistics, the average salary for AI-related positions in 2024 jumped from NT$41,000 to NT$57,000 — an increase of more than 30%. Senior AI engineers can command salaries exceeding NT$1 million per year.
But even with generous compensation, talent remains insufficient. Although Taiwan's universities have opened many AI-related courses, the graduates tend toward theory with insufficient practical experience.
Enterprises have begun cultivating talent themselves. Major companies like TSMC and Foxconn have internal AI training programs. Some AI startups have also begun collaborating with universities to provide internship opportunities.
Competition for overseas AI talent is even fiercer. NVIDIA, Google, Microsoft, and other companies have set up R&D centers in Taiwan to recruit talent with high salaries. The pressure on Taiwan's companies to retain talent is substantial.
The Struggling Startup Ecosystem
Taiwan's AI startup environment is still in its early stages.
Compared to Silicon Valley or Shenzhen, Taiwan has relatively few AI startup companies, and they tend to be smaller. The main reasons are a small market, insufficient funding, and limited talent.
Yet there are some bright spots. AppWorks, Cherubic Ventures, and other investment firms have begun focusing on the AI domain, providing funding and mentorship. The government's "AI Innovation Research Center" also provides technical support.
Interestingly, Taiwan's AI startups often choose to go deep into vertical sectors rather than building platform-type products — for example, specializing in agricultural AI, textile industry AI, or specific medical AI. This may be more in line with the characteristics of Taiwan's industries.
The Impact of the US-China Tech War
The US-China tech war has greatly affected Taiwan's AI industry.
On one hand, the US restrictions on AI chip exports to China have benefited TSMC and other Taiwan companies. NVIDIA and other US companies need more chips manufactured in Taiwan to meet global AI demand (outside of China).
But on the other hand, Taiwan also faces pressure to choose sides. Some AI technologies have been listed as controlled items; Taiwan's companies need to be more cautious about technical cooperation.
More complex still, many Taiwanese companies have important business operations in China. How to comply with US regulations while maintaining commercial relationships with China has become a difficult problem for enterprises.
AI's Taiwan Character
After these years of development, Taiwan's AI industry is beginning to develop its own character.
First is "hardware-software integration." Taiwan has strong hardware manufacturing capabilities; combined with software applications, it can provide complete AI solutions. This is Taiwan's advantage relative to pure software companies.
Second is "vertical applications." Taiwan has deep industry know-how in specific domains (such as medicine and manufacturing); AI plus domain expertise may be Taiwan's distinctive path.
There is also "cost-effectiveness." Taiwan's AI solutions are typically less expensive than those from Europe and America, but more reliable than China's, giving them a certain competitive advantage in international markets.
Future Opportunities and Challenges
The future of Taiwan's AI industry critically depends on finding its own positioning.
We are unlikely to compete with the US in foundation models, and we are unlikely to compete with China in market scale. But we may find opportunity in specific application domains, hardware-software integration, or cost-effective solutions.
Edge AI may be one direction. Taiwan has advantages in IoT and embedded systems; combined with AI chip manufacturing capabilities, a complete supply chain for edge AI devices could be Taiwan's strength.
Green AI is also an opportunity. Taiwan is pushing for net-zero carbon emissions; the application of AI technology in energy saving and optimization has significant demand.
But the challenges are very real: insufficient talent, too small a market, fierce international competition. For Taiwan's AI industry to succeed, it will need close collaboration among government, enterprises, and academia, as well as more patience and long-term investment.
After all, AI is not a technology that can be achieved overnight — it is a capability that requires long-term accumulation. Taiwan has the opportunity, but the road ahead is still long.
References
- National Science and Technology Council AI Policy Development Direction
- Ministry of Economic Affairs AI Industry Promotion Office
- Institute for Information Industry: Current Status of Taiwan's AI Industry Development
- TSMC: 2024 Annual Report AI Business Analysis
- Ministry of Digital Affairs: Four AI Strategies Implementation Results