Taiwan to offer foreign chipmakers $334 million in subsidies

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Taiwan plans to attract foreign semiconductor manufacturers with NT$10 billion ($334 million) in subsidies, reports Bloomberg. The initiative would cover as much as half of a chipmaker’s research and development costs if they establish facilities in-country.

Local leaders hope to bring NT$40 billion ($1.3 billion) in outside infrastructural investments to the East Asian state.

Details of Taiwan’s Chipmaker Subsidy Plan

According to Bloomberg, Taipei will subsidize development and research done by major companies who set up shop in the state (covering at least half of the costs). In addition, the program aims to attract a major investment from a new global semiconductor brand annually over the next seven years. The Taiwanese government will make funding contingent upon the number of new jobs created and the amount of foreign capital invested. The initiative would also compensate local firms that help bring outside corporations to the island.

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Taiwanese officials plan on wooing memory module and power semiconductor companies with the financial aid program. But regional officials also want 5G component and artificial intelligence technology firms to establish a presence on the island.

The Republic of China’s new semiconductor program comes after President Tsai Ing-wen vowed to make Taiwan into a focal point for technological development.

A Smart Strategy in a Tumultuous Moment

Taiwan’s foreign semiconductor subsidy plan is a smart strategy deployed in a tumultuous moment.

Because of the recent Sino-American trade war and the coronavirus pandemic, many large electronics companies are looking to diversify supply chains beyond mainland China. Indeed, Apple and Samsung are investing significant capital to increase component production capability in India, Mexico, and Vietnam.

Consequently, Taiwan’s financial aid initiative might give it an edge with enterprising microelectronics brands.

At the same time, the United States government is making a big push to increase the nation’s chip-making self-sufficiency. In pursuit of that goal, Washington is providing the Taiwanese Semiconductor Manufacturing Company (TSMC) with significant subsidies to establish a $12 billion chip factory in Arizona.

The Taiwanese government is ensuring the vitality of the island’s technology sector by utilizing a similar methodology. The country’s financial aid program will likely foster the development of a nexus of domestic chip innovation. As the existence of Silicon Valley proves, advanced research and development hubs tend to attract original thinkers and promote game-changing cross-pollination.

As a result, Taiwan’s semiconductor incentive program could spark the next great leap forward in that country’s microelectronics industry.

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