The semiconductor industry and its related value chain remain central to driving innovation, talent development, and industrial growth. Taiwan’s global leadership in semiconductor manufacturing and its robust production capabilities continue to amplify the return on strategic investment in these areas. To sustain and enhance this leadership position, it is essential that the government, industry stakeholders, and relevant institutions deepen engagement with international standards, talent pipelines, and cutting-edge technologies. Such alignment will further reinforce Taiwan’s critical role in the global semiconductor supply chain.

The Committee commends the government for its proactive efforts in addressing key recommendations outlined in the 2024 Semiconductor Committee White Paper chapter, particularly in talent attraction and aligning semiconductor security standards with global norms. However, as international competition intensifies and non-commercial risks increasingly shape the global semiconductor landscape, the Committee urges the government and other stakeholders to address the following issues:

Suggestion 1: Ensure electricity affordability and market flexibility to sustain semiconductor competitiveness.

1. Maintain a stable and competitive electricity rate to support semiconductor industry growth. Stable and predictable electricity pricing is essential to maintaining the global competitiveness of Taiwan’s semiconductor industry and its supply chain. Industrial electricity rates doubled between 2022 and 2025, disproportionately impacting large users. As a result, Taiwan’s industrial electricity prices now approach those of major competitor economies, eroding its comparative advantage.
   At the same time, a decline in international raw material costs has reduced the average generation cost of state-owned Taiwan Power Co. (Taipower) to NT$3.31 per kWh (as of March 2025), while the average industrial electricity rate stands at NT$4.29 per kWh. This shift nullifies past arguments that industrial rates are subsidized below cost.
   Given the importance of Taipower’s financial health in supporting public infrastructure (including emergency response capacity, power grid resilience, and electricity access in airports, hospitals, and industrial parks), the Committee proposes the following:
   a.) Avoid further industrial electricity price hikes as current rates already exceed generation costs.
   b.) Provide targeted financial support to Taipower to address policy-mandated losses, particularly from below-cost civilian rate subsidies.
   c.) Study appropriate policies and establish mechanisms that prevent Taipower from remaining in its current situation of operating at a loss despite decreasing power procurement costs and increasing electricity prices.
2. Ensure renewable energy market flexibility to sustain semiconductor competitiveness.
   2.1 Continue strengthening Taiwan Smart Electricity and Energy Co. (TSEE) to expand offshore wind accessibility. Offshore wind power remains critical to Taiwan’s renewable energy roadmap, particularly for semiconductor manufacturers. However, several structural challenges persist, including high offshore wind power tariffs in relation to prevailing industrial electricity rates; long-term fixed-rate commitments of 20-25 years for power purchase agreements (PPAs); and participation barriers caused by creditworthiness and performance guarantee thresholds.
   To address these issues, the Ministry of Economic Affairs (MOEA) launched TSEE in 2024. TSEE’s centralized purchase-and-distribution model allows offshore wind power to be repackaged into smaller quantities with shorter contract durations. It also offers more flexible performance guarantees.
   The Committee recommends continued government support of TSEE, which is well-positioned to reduce entry barriers for corporate renewable energy procurement while increasing flexibility in the offshore wind PPA market, thereby bolstering the competitiveness of Taiwan’s semiconductor and other strategic industries.
   2.2 Introduce flexible mechanisms for surplus renewable energy allocation and Taiwan Renewable Energy Certificate (T-REC) transfers. The Committee welcomes the Electricity Act amendment establishing a secondary market for trading surplus renewable energy. This measure is a positive step toward unlocking market liquidity. However, stakeholders remain concerned about the limited absorptive capacity of this market, particularly given anticipated offshore wind surpluses.
   To address these challenges, the Committee recommends two mechanisms:
   ．The conditional unbundling of T-RECs from the sale of surplus energy to Taipower. Under this approach, when the secondary market fails to identify corporate offtakers, renewable energy buyers can obtain T-RECs by paying the difference between their PPA price and Taipower’s procurement cost. Such an approach would allow buyers to meet higher renewable energy procurement targets without incurring the excessive costs often associated with take-or-pay PPAs, which require buyers to pay for contracted energy volumes even if not fully consumed.
   ．Expansion of the regulatory sandbox settlement mechanism, allowing surplus energy offsets across time periods and entities. Such flexibility would mitigate seasonal generation imbalances and further increase renewable energy utilization efficiency.

Suggestion 2: Facilitate the recruitment and retention of foreign talent in the semiconductor sector by enhancing regulatory efficiency and reducing administrative barriers.

To remain competitive in strategic industries, particularly semiconductors, Taiwan must continue improving its environment for attracting international talent. Considering ongoing global competition, rising relocation costs, and delays in processing, the Committee recommends the following targeted reforms:

1. Enhance transparency and timeliness in work permit processing. Employers frequently report unpredictable work permit processing times, complicating onboarding for foreign hires. Although official timelines are two weeks for foreign professionals and four for foreign special professionals, actual durations vary without explanation, hindering workforce planning.
   To address this issue, the Committee recommends introducing a tiered processing framework based on application complexity. For instance, standard applications with complete documentation could be processed within 10 business days, while more complex submissions could follow a longer track. A voluntary self-assessment checklist could help employers ensure documentation and eligibility compliance, reducing administrative delays.
   To improve transparency, the government should introduce basic status notifications using automated emails at key stages (receipt, review, information requests, and decisions). Standardized templates could minimize costs. Additionally, publishing a summary of common reasons for delays (such as incomplete documents or unclear job descriptions) would help employers proactively resolve issues.
   These practical reforms would reduce uncertainty, streamline onboarding, and enhance Taiwan’s appeal to global talent.
2. Expand electronic processing and acceptance of work permits from all authorities. Alien Resident Certificate (ARC) applicants face avoidable delays due to inconsistent processing channels. For example, Taiwan’s National Immigration Agency accepts online applications only for work permits issued by the MOL, but not those issued by other authorities such as the Science Park Administration. As a result, many applicants must resort to paper-based submissions, which prolong the processing time by approximately five additional business days.
   The Committee recommends that the government fully enable electronic ARC applications for all work permits, regardless of issuing authority. Additionally, Taiwan’s overseas missions in countries such as the United States, Japan, and South Korea should accept secure digital copies of work permits in place of originals to reduce logistical burdens and document handling delays.
3. Facilitate recruitment of Filipino white-collar talent by adjusting bilateral requirements. Domestic companies often seek to recruit skilled Filipino professionals due to their technical expertise and English proficiency. However, current regulations imposed by the Philippine government limit the direct hiring of Filipino talent and require the use of standardized contracts with additional obligations (such as round-trip airfare, accident insurance, and repatriation support), even for white-collar hires. Moreover, once a company hires five Filipino professionals, any subsequent hires must be conducted through a licensed local agency, increasing costs and administrative complexity.
   The Committee recommends that Taiwan engage in bilateral discussions with the Philippine government to:

   ．Allow white-collar talent in technology sectors to be employed under industry-standard contracts that reflect the nature of professional roles and reduce misalignment with labor protections designed for blue-collar workers.
   ．Adjust the direct hiring threshold, enabling companies to hire a greater number of professionals without requiring agency involvement, thereby reducing costs and improving recruitment efficiency.

   These changes would enhance Taiwan’s access to a key labor pool, ensure smoother onboarding processes, and support the growth of Taiwan’s high-value industries.

Suggestion 3: Strengthen Taiwan’s role as a global R&D hub for international semiconductor technology leaders.

Taiwan’s position as a global leader in semiconductors and information and communications technology (ICT) has been shaped by early-stage collaborations with multinational companies, which brought investment, technology, and training that accelerated local industrial development. These partnerships have created strong synergies between international companies and domestic manufacturers.

The MOEA’s A+ Industrial Innovative R&D Program (the A+ program), which aims to encourage investment in high-value-adding, cutting-edge industrial technologies and facilitate multidisciplinary integration, has played an important role in reinforcing this foundation. The A+ program has successfully helped global technology companies establish R&D bases in Taiwan and collaborate with local supply chains to enhance Taiwan’s overall R&D capacity. Public data indicates that the program has catalyzed more than NT$520 billion (US$17 billion) in investment and supported the creation of over 6,600 high-paying jobs. This demonstrates the program’s effectiveness in drawing global companies to expand their R&D footprint in Taiwan.

To build on this success and respond to intensifying global competition, the Committee recommends the following policy actions:

1. Maintain a stable and predictable R&D investment incentive framework for international companies. The decision-making process for multinational R&D investments is shaped by long-term predictability and regulatory clarity. To sustain Taiwan’s attractiveness, the Committee recommends that the government continue providing stable, sufficient funding through initiatives such as the A+ program. A consistent support structure will ensure that international companies can make multi-year investment plans with confidence and reinforce Taiwan’s image as a trusted innovation partner. The continuity of this program could also demonstrate the Taiwan government’s openness to supporting international companies that meet program requirements, including those introducing advanced technologies and forging long-term ties with Taiwan’s industrial and academic sectors.
2. Benchmark R&D incentives against competing countries to maintain regional competitiveness. Many of Taiwan’s regional competitors, such as South Korea and Singapore, have substantially increased various subsidies in recent years to attract foreign investment in high-tech sectors. Taiwan’s current incentive levels for foreign R&D investment remain significantly low.
   To ensure continued global relevance, the Committee urges the government to review and adjust its incentive structures, in particular those related to R&D subsidies, to keep up with regional benchmarks. Doing so would reduce the impact of non-commercial risk factors and ensure that Taiwan remains competitive in the race for advanced R&D activity, reinforcing its reputation as a preferred high-tech investment hub.
3. Adopt more flexibility in foreign R&D talent criteria in R&D subsidies to meet business operational needs. Multinational companies are often well-positioned to recruit internationally. However, strict thresholds under current subsidy programs, such as requiring a fixed percentage of foreign R&D talent, may limit a company’s ability to deploy talent efficiently.
   The Committee recommends that the government introduce greater flexibility in foreign R&D personnel ratio thresholds to better reflect real-world business needs. At the same time, the government should actively encourage international companies to incorporate local talent into their Taiwan-based R&D operations through internship programs, co-research projects with universities, and upskilling initiatives. These measures would amplify the local benefits of foreign R&D investment, raise the skill level of Taiwan’s workforce, and support high-quality job creation.
   Through these recommendations, Taiwan can further strengthen its position as a preferred R&D hub for technology leadership and continue playing a central role in advancing innovation, developing high-value industries, and supporting long-term economic resilience.

Suggestion 4: Capture AI opportunities for Taiwan’s semiconductor industry by incorporating an edge AI strategy into the national AI program.

Taiwan’s strength in semiconductor manufacturing and its complete supply chain position it to capitalize on growing AI-driven chip innovation. The Committee commends the government’s efforts under President Lai Ching-te’s AI island vision and the launch of the Taiwan Chip-based Industrial Innovation (CbI) Program, which seeks to integrate AI with chips to drive innovation and accelerate AI application across various sectors.

However, current AI policies remain predominantly focused on establishing Taiwan’s AI infrastructure and computing capacity through data centers, to facilitate centralized, cloud-based model training. Though supportive of large-scale AI training, this approach raises concerns related to rising energy consumption, telecom bandwidth limitations, and increasing strain on power infrastructure, as well as data privacy and security issues associated with cloud-based systems. These risks could limit the scalability and sustainability of AI adoption over time.

To complement existing strategies, the Committee recommends that the government prioritize the development of edge AI (AI that performs inference and computation at or near the data source). Edge AI enables real-time processing with lower latency, enhanced privacy, and reduced energy and transmission costs. These benefits are particularly well suited to Taiwan’s strengths in PC, mobile, IoT, automotive, and XR device ecosystems. By encouraging the growth of edge AI alongside cloud AI, Taiwan can build a robust and hybrid AI economy aligned with global market trends.

1. Integrate edge AI into the national AI flagship strategy. The Committee urges the inclusion of an explicit edge AI program within major national initiatives, such as the CbI Program. Doing so would position Taiwan to lead in edge AI by leveraging its semiconductor and hardware ecosystem. Beyond infrastructure for large models, policy support should also include targeted incentives for R&D, prototyping, and commercialization of edge AI applications across vertical industries.
2. Designate a coordinating authority for cross-ministry edge AI policy alignment. To ensure coherent and synchronized policy development under Executive Yuan oversight, the Committee recommends assigning a lead agency such as the National Science and Technology Council’s Office of Science and Technology Policy (OSTP) to coordinate across relevant ministries, including Economic Affairs, Education, Health and Welfare, and Digital Affairs. In particular, collaboration between the OSTP and the Taiwan CbI Office should be deepened to align edge AI goals with industrial and innovation policies. A formal public-private dialogue mechanism should solicit industry input and align strategies with market needs.
3. Support the development and deployment of sector-specific on-device models using Taiwan’s sovereign AI model. The Committee welcomes the government’s  national large language model (LLM) project, TAIDE (Trustworthy AI Dialogue Engine), developed and trained based on traditional Chinese language and aligned with Taiwan’s culture and values. To ensure widespread adoption and relevance across industries, the government should incentivize developers, startups, and universities to collaborate to create smaller, specialized AI models optimized for on-device use in high-impact sectors such as education, healthcare, and public administration.
   These models should prioritize privacy and efficiency and run on edge devices to cut costs and latency. Additionally, government agencies should be encouraged to set targets for pilot deployments of edge AI solutions based on the TAIDE model, demonstrating practical use cases and reinforcing Taiwan’s commitment to secure, sovereign AI innovation.
   By incorporating edge AI into its broader AI strategy, Taiwan can reduce systemic risks associated with centralized computing, unlock new economic opportunities across hardware and software value chains, and solidify its position as a leader in the next phase of global AI development.