Taiwan's National AI Strategy: The Path from Silicon Island to Smart Island

Taiwan occupies an irreplaceable pivotal position in the global semiconductor supply chain — over 90 percent of the world's most advanced chips are manufactured on this island. However, between mastering hardware manufacturing capability and securing national competitiveness in the AI era lies a gap that must be bridged by national strategy. As the United States, China, and the European Union each elevate artificial intelligence to a national-level priority, Taiwan needs more than a slogan about "developing the AI industry." It requires a systematic strategic framework encompassing talent, legislation, industry, and diplomacy — a transformation path from "Silicon Island" to "Smart Island."

I. Taiwan's Strategic Starting Point: Hardware Strengths and Software Shortcomings

Taiwan's starting position in the AI race features both enviable advantages and shortcomings that must be honestly confronted. The advantages are obvious: TSMC's advanced manufacturing processes, MediaTek's AI chip designs, and Foxconn's AI server manufacturing together form the hardware foundation of global AI infrastructure. As the world's tech giants queue up for GPU production capacity, Taiwan commands the chokepoint of this supply chain.

Yet hardware superiority does not automatically translate into AI application superiority. Drawing from my experience conducting digital finance research at Cambridge University and currently leading Meta Intelligence in AI software development, I have come to deeply appreciate that the value of AI lies not in the chips themselves, but in the integration of data, algorithms, and application scenarios. Taiwan currently faces three structural shortcomings: first, the outflow and insufficiency of top-tier AI research talent; second, the lack of large-scale domestic datasets and application scenarios; and third, a legislative framework that has not kept pace with AI development.^[1]

II. Four Strategic Pillars: Talent, Legislation, Industry, and Diplomacy

To achieve the transformation from Silicon Island to Smart Island, I believe Taiwan must construct four mutually reinforcing strategic pillars:

First Pillar: A paradigm shift in talent development. Taiwan's education system excels at producing outstanding engineers, but the AI era demands interdisciplinary professionals who can bridge technology, law, business, and ethics. During my tenure directing the MBA program at Zhejiang University's International Business School, my deepest insight was this: the best AI practitioners are not those who write the best code, but those who best understand how to embed technology into business contexts. Taiwan's universities need to break down departmental silos and establish "AI + X" cross-disciplinary training models — AI + Law, AI + Healthcare, AI + Finance, AI + Manufacturing.

Second Pillar: Forward-looking legislative development. Drawing from my legal research background, I believe Taiwan needs not a single "AI-specific law" but rather an adaptive legal framework. The EU's AI Act provides a reference model for risk-based classification, but for Taiwan, a more pragmatic approach would be to embed AI-related provisions within existing legislation (the Personal Data Protection Act, Copyright Act, and Consumer Protection Act) while simultaneously establishing a cross-ministerial AI governance coordination mechanism.

Third Pillar: Industrial transformation as a systems-level undertaking. Taiwan's AI industrial strategy should not focus solely on incubating "AI startups" but should also drive the AI-powered transformation of existing industries. Taiwan's manufacturing, finance, and healthcare sectors all possess rich domain-specific data — invaluable assets for training vertical AI models. The government's role is to build the infrastructure and trust mechanisms for data sharing, transforming data from fragmented corporate assets into national-level strategic resources.

Fourth Pillar: A new game in tech diplomacy. Taiwan cannot afford to be absent from the rule-making process of global AI governance. Taiwan's semiconductor standing gives it unique leverage in technology diplomacy — but this card must be played proactively. Taiwan should actively participate in international AI standard-setting, digital trade rule negotiations, and build an international reputation as a practitioner of "trustworthy AI."^[2]

III. Learning from Others: Comparing International AI Strategies

During my international policy research at Cambridge University, I had the opportunity to closely observe multiple countries' national AI strategies. The United States' advantage lies in its top-tier talent and venture capital ecosystem, but it lacks a unified regulatory framework at the federal level. China's advantage lies in its massive data scale and government mobilization capacity, but it faces an international trust deficit. The EU's AI Act is the most systematic regulatory framework globally, but excessive regulation may stifle innovation.

The most instructive cases for Taiwan may be Singapore and Israel. With a population of just 5.8 million, Singapore has positioned AI as a core tool of national governance through its "National AI Strategy 2.0," pioneering implementation in smart city management, financial regulation, and public services. Israel, with its "Startup Nation" positioning, has transformed its AI R&D capabilities into both a diplomatic asset and an economic engine.

Taiwan shares similar characteristics with these two nations: a small economy, a highly educated population, and a strong technological foundation. But Taiwan's unique advantage — its pivotal position in the semiconductor supply chain — is something neither Singapore nor Israel possesses. How to convert this hardware advantage into a holistic advantage for the AI ecosystem is the central question of Taiwan's AI strategy.^[3]

IV. Risks and Challenges: Structural Issues That Cannot Be Avoided

Formulating a national AI strategy cannot be limited to vision statements; it must also squarely confront structural challenges.

The talent "brain drain effect" is the most pressing issue. When American tech giants attract top AI talent with salaries three to five times higher than those in Taiwan, domestic salary adjustments alone cannot compete. A more effective strategy is to create a "talent retention ecosystem" — enabling professionals to accomplish things in Taiwan that they cannot in Silicon Valley, such as leveraging Taiwan's unique industrial data to train vertical-domain models.

Geopolitical risk is an inescapable backdrop to Taiwan's AI strategy. Taiwan's semiconductor position is both leverage and liability — over-reliance on the strategic value of a single industry could become a vulnerability in geopolitical conflicts. An AI strategy must simultaneously account for supply chain resilience and technological self-sufficiency, avoiding the trap of putting all eggs in one basket.

Building public trust is equally critical. The large-scale deployment of AI requires public trust and acceptance. Taiwan holds a unique advantage here — as one of Asia's most mature democracies, Taiwan is well-positioned to develop a "democratic AI" model, building social legitimacy for AI applications through citizen participation and transparent governance.^[4]

V. Action Blueprint: From Today to 2030

Based on the above analysis, I propose five action recommendations for Taiwan's national AI strategy:

1. Establish a national-level AI Strategy Office — reporting directly to the Executive Yuan, coordinating cross-ministerial AI policy to prevent fragmented policymaking across agencies. This should follow the model of Singapore's Smart Nation and Digital Government Office.
2. Launch an "AI + Industry" national program — selecting five key vertical domains (smart semiconductor manufacturing, precision medicine, intelligent finance, sustainable energy, and smart agriculture) to build industry-grade datasets and AI application platforms with national-level resources.
3. Develop an AI legislative framework — adopting a legislative path that leads with "regulatory sandboxes" and is grounded in "risk-based classification," striking a balance between promoting innovation and protecting rights.
4. Implement a "dual-track" AI talent system — one track to cultivate domestic interdisciplinary talent (university curriculum reform) and another to attract top international talent (research visas, tax incentives, and startup support).
5. Build an international "Trustworthy AI" brand — with democratic governance, privacy protection, and transparent accountability as core values, establishing Taiwan's voice in international AI governance forums.

From Silicon Island to Smart Island is not merely a slogan but a systemic transformation requiring national will, institutional innovation, and social consensus — a national undertaking in productivity paradigm shift. Taiwan possesses an enviable starting position — the question is whether we can, with strategic vision and execution speed, convert that position into a lasting competitive advantage in the AI era.^[5]