The Committee expresses its gratitude to the government for its assistance in keeping Taiwan’s semiconductor industry resilient and competitive while moving toward decarbonization in a sustainable manner.

A stable and consistent power supply, underpinned by robust grid resilience, is essential for the continuous development of the semiconductor industry. The government should maintain its focus on investing in grid infrastructure upgrades and implementing smart grid technologies.

Taiwan’s Pathway to Net-Zero Emissions in 2050 sets guidelines for all stakeholders, including the semiconductor industry, to transition toward a sustainable future. Considering the ongoing expansion and investment in Taiwan’s dynamic semiconductor sector, it is crucial for the government to engage in regular dialogue with industry representatives to assess and ensure the effectiveness of this plan in meeting real industry demands.

Looking forward, the development of an enhanced policy and regulatory framework that promotes renewable energy, coupled with intensified efforts to attract foreign talent and robust engagement with international partners through incentive programs and standard harmonization, will be key to ensuring the long-term stability and success of the industry. We urge the government to engage in constructive discussions with industry to address these critical issues effectively and support the growth of a thriving semiconductor industry ecosystem.

Suggestion 1: Maintain competitive electricity prices while enhancing the regulatory framework for renewable energy and carbon fees.

1.1   Implement a more transparent electricity price review mechanism. The industry seeks to handle energy more intelligently and efficiently at all levels of the supply chain to ensure a feasible pathway toward a more sustainable future. Implementing a transparent electricity price review mechanism is crucial for manufacturers to plan for the long term. Consistent pricing allows businesses to allocate resources, invest in infrastructure, and strategize effectively. Abrupt price surges disrupt operations and hinder growth, which is particularly concerning for global investors seeking to maintain or increase their operations in Taiwan. The mechanism should therefore consider the industry’s assessments of the impacts of changes during the review process.

We highly commend the government’s effort in April to communicate the latest energy price adjustments and to introduce a mechanism for setting electricity rates that considers the differing conditions in various industries. To ensure that such practices continue, key industry stakeholders, including foreign investors with manufacturing activities in Taiwan, should be represented in the tariff review mechanism. Whether through a government-convened price review committee or a formal industry consultation platform, this approach would provide the opportunity for the prompt and constructive exchange of pricing information and diverse views, contributing to the maintenance of a business-friendly environment for foreign investment.

1.2   Expand the accessibility of green energy. Since the amendment of the Electricity Act in 2017, corporate power purchase agreements (PPAs) have been available for businesses to procure renewable energy. A utility green tariff program allows larger commercial and industrial customers to purchase bundled renewable electricity from a specific project through a special utility tariff rate. Such a program broadens the portfolio of procurement options, and alongside PPAs can be a useful instrument in addressing diverse customer needs with different energy consumption profiles (usage patterns and volumes) and credit ratings. At the same time, it helps unlock clean energy sources, particularly offshore wind projects that have large volumes and seasonal variations in power generation.

Similar programs in other markets like the United States and Japan allow public utility companies to offer renewable energy certificates (RECs) bundled with electricity as the consumer specifies. This flexible system benefits businesses that face renewable energy procurement challenges due to current high PPA prices, that do not qualify for a PPA due to their load profile, or that have low credit ratings from international financial institutions. A utility green tariff program would provide an additional procurement option for consumers seeking renewable energy and help satisfy the bankability requirements for project financing, greatly improving the development potential of renewable energy.

1.3   Review the regulatory framework for renewable energy development. The escalating cost of renewable energy is challenging the ability of Taiwan’s high-tech industry to reduce its carbon footprint. The regulatory framework partially contributes to these high prices, inadvertently increasing costs and creating barriers to efficient renewable energy deployment. It is estimated that the current local content requirements account for between 10% and 20% of total costs. Eliminating or substantially reducing the local content policy would significantly lower costs by enabling the procurement of materials and services from globally competitive sources.

Furthermore, import tariffs on critical components should be exempted to ensure competitive pricing for green and clean energy. Grid-related costs, such as grid enhancement, reserve capacity, and Taiwan Power Co. (Taipower) wheeling fees, should also be reviewed to prevent inequitable or double charging and allow more flexibility in payment. We recommend waiving these charges during the early stages of deployment.

1.4   Include foreign industry in the decision-making process regarding carbon fees and related funds. Excluding foreign investors from such critical policy-making processes as the Carbon Fee Review Committee undermines the creation of transparent and fair policies. The Committee urges the government to prioritize a policy formulation process that is welcoming to global investors and involves foreign industry in the decision-making process for carbon fees and related funds.

Under Articles 32 and 33 of the Climate Change Response Act, the Ministry of Environment (MOENV) is required to establish a dedicated fund from collected carbon fees. This fund is designated for initiatives aimed at reducing greenhouse gas emissions and adapting to climate change. The Committee expects the MOENV to adopt an inclusive and transparent approach in devising and implementing the fund utilization mechanism that includes participation from foreign company representatives. Both Europe and the United States, with their experience in climate funds and carbon emission trading systems, serve as models. By including international representatives, Taiwan can leverage diverse perspectives and collaboratively advance toward achieving its 2050 net-zero goals.

Suggestion 2: Adopt measures to help foreign talent integrate into Taiwanese society.

The Committee commends the government for embracing our suggestion to design new programs to better attract foreign talent. We particularly appreciate the Executive Yuan’s approval of allocating NT$5.2 billion to retaining foreign students in Taiwan after graduation. The scholarships granted by the National Development Fund and internship stipends from businesses will further incentivize those who plan to study science, technology, engineering, mathematics, finance, and semiconductors to remain here.

However, the Committee has identified common challenges faced by the international talent community. We believe that Taiwan can become an even more attractive destination for foreign talent through efforts focusing on digitalization, tax benefits, and a soft-landing program that helps foreign talent settle quickly.

2.1  Digitalize the reimbursement process for employment incentive programs. While the government provides tax incentives to attract foreign talent, the reimbursement process can be burdensome and time-consuming. For example, the requirement by the National Taxation Bureau for hard copy documentation during tax exemption applications impedes the onboarding process for foreign talent. Without adequate supporting documents (such as original receipts, invoices, tickets, and boarding passes), preferential tax treatments are disallowed, leading to additional tax implications for both employers and employees. We recommend transitioning to a fully electronic certification process to expedite these applications.

2.2  Include tuition subsidies among non-taxable income items. Within the government’s foreign talent recruitment program, school scholarships are considered tax-exempt income. In contrast, tuition subsidies and other education assistance and allowances, which are often more substantial than scholarships, do not qualify as non-taxable income. This discrepancy imposes a considerable tax burden on foreign talent, particularly during the initial relocation phase when many opt to enroll their children in international schools. This period is vital for their adjustment to life in Taiwan, and the significant financial impact of these tax regulations can be challenging.

The Committee recommends expanding the scope of “scholarships” to include tuition subsidies or adding tuition subsidies as one of the measures eligible for tax-deduction benefits. This change would substantially alleviate the financial burden for child-related expenses and demonstrate to foreign professionals that Taiwan’s work environment caters to family needs.

2.3  Launch an online portal with clear procedures and resources for workers relocating to Taiwan. As the business environment increasingly globalizes, facilitating the seamless movement of talent across borders in consideration of employer capabilities and company needs becomes increasingly important. While the government has established clear processes for work permits and visas, we emphasize the need to also offer comprehensive resources to global talent and their families. These resources should assist them in efficaciously adapting to Taiwan’s culture, education system, and lifestyle, covering each stage of their relocation. A smooth transition process is vital in creating a positive professional and personal experience.

2.4  Streamline the landing process for foreign talent in Taiwan. Currently, the process for foreign talent from countries like the United States to secure a special professional work permit, visa, and Alien Residence Certificate (ARC) in Taiwan can take between two and three months. This lengthy duration complicates the recruitment process for companies. We suggest that the Ministry of Labor aim to reduce this processing time to one month, enhancing both scheduling and operational efficiencies.

Furthermore, foreign talent who have previously held PRC nationality often face challenges in obtaining the Household Registration Cancellation Certificate, a document necessary for ARC applications in Taiwan, from regional authorities in China. This process can be particularly time-consuming and varies by region. We recommend that the National Immigration Agency consider accepting alternative forms of evidence that are more flexible. Suitable alternatives could include affidavits or other documentation that can confirm the applicant either does not have household registration in China or has renounced PRC nationality. Such measures would alleviate the bureaucratic hurdles and make the process more accommodating for applicants.

Suggestion 3: Harmonize Taiwan’s chip security infrastructure with international standards.

The Committee applauds the efforts and progress made by the Ministry of Digital Affairs (MODA) and the Cybersecurity Technology Institute (CSTI) in promoting cybersecurity. We also appreciate the development of chip security standards and testing labs for the IoT ecosystem through Taiwan’s first chip security test specification. Under the guidance of MODA, the CSTI can actively pursue engagement with the international standards organization, GlobalPlatform (GP), aligning Taiwan’s chip security standard with international benchmarks such as the Security Evaluation Standard for IoT Platforms (SESIP). This alignment will facilitate future mutual recognition of certifications.

Positive engagement with industry and member-driven global standard organizations will enable Taiwan to keep pace with the latest developments in cybersecurity requirements. This engagement can track how technical specifications evolve to answer the fast-growing needs of existing and new markets, such as the IoT and automotive sectors. Since Taiwan’s chip and device manufacturers mainly develop products for export, this type of engagement is vitally important.

Achieving mutual recognition between Taiwan’s chip security and testing standards and international industry-standard platforms would streamline the certification process for Taiwanese IoT device makers. This alignment would eliminate the need for multiple international certifications, simplifying the entry into global markets and enhancing operational efficiency. It would also showcase Taiwan’s technological capabilities and its commitment to advancing global chip security standards. Such a development could significantly reduce time and costs for manufacturers, further bolstering Taiwan’s position in the international semiconductor market. To accelerate progress, the Committee recommends the following:

3.1   Make Chinese and English document versions available to all stakeholders and publish them online for broader access. These materials should include all the latest chip security-related programs and technical specifications. Allocating resources to produce English versions of all documents in a timely manner will increase transparency and visibility among international industry players and subject-matter experts about Taiwan’s chip security programs.

3.2   Increase the transparency of the consultation process and invite multinational companies to comment on future regulations for chip security programs. We urge the government to proactively share policy plans, provide status-report briefings, and seek input from key international trade organizations and  business associations in Taiwan.

3.3   Develop a review mechanism to align the security requirements and standards on products developed by different government departments. For example, various cybersecurity standards are managed by distinct agencies under MODA. These include the chip security standard for IoT platforms, the cybersecurity standard for drones, and the protocols established by the newly founded Artificial Intelligence Evaluation Center for assessing AI product security. Although these initiatives are related and crucial for enhancing overall digital security, they are independently driven by different divisions within MODA. This delineation provides specialized focus, but without sufficient coordination it can create confusion and inconvenience across technology sectors.

As the development of AI chips accelerates and the need for comprehensive security assessments grows, it is imperative for the government to regularly review its chip security programs. Continuous engagement with international partners and industry organizations is crucial for establishing and maintaining a trustworthy and secure ecosystem throughout the information and communications technology (ICT) product supply chain. This proactive approach would not only bring alignment with global security standards but also reinforce Taiwan’s commitment to high-tech security and trustworthiness.

Suggestion 4: Encourage international tech companies’ participation in the Taiwan Chip-based Industrial Innovation Program.

In November 2023, the Executive Yuan approved the Taiwan Chip-based Industrial Innovation Program (Taiwan CbI) to encourage further upgrades and development of Taiwan’s semiconductor industry and earmarked a total of NT$300 billion (US$9.3 billion) for the program’s implementation between 2024 and 2033. The first five-year phase will focus on leveraging Taiwan’s leading position in chip manufacturing, packaging, and testing to develop innovative applications by integrating silicon chips into critical technologies such as generative AI. The program also aims to improve domestic talent cultivation and attract R&D professionals and international chip startups to secure Taiwan’s technological strength over the next 10 years. Similar efforts were also made in January 2023 through the amendment of Article 10-2 of the Statute for Industrial Innovation (also known as the Taiwanese CHIPS Act), which aims to strengthen Taiwan’s role in global supply chains, enhance supply chain resilience, and increase industrial competitiveness by providing tax incentives.

The Committee applauds the government’s forward-looking industry promotion initiatives, which hold the potential to enhance Taiwanese companies’ success in the global market. We emphasize the importance of international collaboration and urge the government to actively engage foreign companies in the policy development process. The government should further strengthen Taiwan’s connections with the international community and attract foreign investments while bolstering the domestic semiconductor industry by formulating inclusive incentives.

4.1 Conduct briefings and solicit input from key stakeholders. These briefings should include domestic and foreign companies as well as industry associations. Collaboration among these entities is crucial to formulate industry policies like Taiwan CbI and provide tax incentives to R&D and manufacturing equipment investors through the Statute for Industrial Innovation.

4.2   Establish robust communication channels and designate liaison contacts for industry stakeholders to ensure the dissemination of timely updates. These updates should encompass both completed initiatives and those currently in development, providing clear insights into the timelines, objectives, and participatory opportunities of various policies. This structured communication strategy will enable industry stakeholders to better understand ongoing and upcoming programs, fostering a more informed and collaborative environment.

4.3  Provide sufficient policy incentives encouraging multinational companies to allocate advanced R&D technology resources to Taiwan. Foreign technology companies with established operations in Taiwan are integral to the domestic industry and global supply chains. The Committee recommends that the government facilitate mutually beneficial collaborations through these incentive programs, thereby strengthening the Taiwanese industry ecosystem and ensuring sustained innovation and growth.

The design of these incentives should avoid conditions or thresholds that effectively exclude foreign companies, provided that the involvement of these companies can effectively achieve the policy goals outlined in relevant regulations or programs. We urge the government to review these regulations and programs to eliminate potential barriers that prevent foreign companies’ participation.