2026-04-23
The Artificial Intelligence (AI) industry is entering a 20-year AI supercycle that is reshaping global demand. According to a 2026 report by BofA Securities, the rapid growth of large language models (LLMs) and high-performance computing (HPC) data center semiconductors now account for 40% of total semiconductor demand—surpassing smartphones (30–35%) to become the largest application segment. Taiwan’s strengths in sub-3nm manufacturing and advanced packaging technologies such as CoWoS (Chip-on-Wafer-on-Substrate) is driving a shift from hardware OEM to a key pillar of global AI infrastructure. At the same time, international tech leaders continue to expand investment and procurement in Taiwan. Collaboration models are also evolving – from traditional supply relationships to deeper R&D integration and real-world deployment through software-hardware integration – further consolidating Taiwan’s strategic position in the global AI computing ecosystem.
Global semiconductor giants are shifting their strategies in Taiwan from hardware procurement to ecosystem integration and expanding computing capacity. To secure production capacity, capital commitments, and ensure stable supply for foundry and high-end server assembly, NVIDIA has significantly increased its global procurement—from US$16.1 billion to US$95.2 billion—with order visibility extending through 2027. Taiwan plays a critical role as a strategic supply hub, with TSMC as a key partner in advanced manufacturing and capacity support. This deep integration anchors Taiwan’s hardware infrastructure within the global AI ecosystem while helping mitigate supply chain risks.
Beyond capacity allocation, localized R&D investment is becoming a key of collaboration. AMD is expanding its presence in Taiwan, investing NT$8.64 billion to establish R&D centers in Tainan and Kaohsiung. Through partnerships with 33 local suppliers, AMD is building a strong technical alliance expected to generate an additional NT$15 billion investment. These centers are projected to cultivate thousands of high-end AI professionals annually and are integrated with Taiwan’s National Center for High-Performance Computing to provide top-tier GPU resources directly to local enterprises and startups – lowering the barriers to AI adoption and proof-of-concept development.
With hardware and computing capacities in place, the three major cloud providers are expanding investment in cloud infrastructure to drive commercial applications and scale Agentic AI. In smart healthcare, Microsoft has partnered with Far Eastern Memorial Hospital, leveraging its Azure Taiwan data center to deploy Taiwan’s first cloud-based core genome sequencing system. By combining GPU acceleration and cloud-native technologies, the system significantly reduces the processing time for large-scale genomic analysis and enhances clinical decision-making for precision medicine.
In industry transformation, Amazon Web Services is intergrating Agentic AI into business operations. A notable example is the century-old Taiwanese pastry company Jiu Zhen Nan, which developed dedicated AI models on AWS in 2025. Applications range from demand forecasting to automated order processing and production reporting.
From clinical decision-making in precision healthcare to supply chain automation in centuries-old enterprises, Microsoft and AWS are scaling Agentic AI across industries—marking the transition of cloud platforms from infrastructure providers to core engines of enterprise transformation.
AI development is entering a new phase in 2026—from centralized cloud computing to large-scale edge deployment and physical AI applications. To meet the computing density and system heat-dissipation demands of next-generation architectures such as NVIDIA Vera Rubin, Taiwan’s supply chain is well positioned, supported by strong technical capabilities and large-scale manufacturing capacities.
A surge in demand for key components is underway, accompanied by rapid technological advancement. TSMC and ASE are expanding CoWoS capacity, and this momentum is driving growth across key component suppliers, including EMC and TUC in high-frequency, high-speed copper clad laminates (CCL), as well as Auras and AVC in advanced liquid cooling modules.
Building on this wave of hardware upgrades, integration is accelerating at both the subsystem and end-device levels. Advantech, a leading industrial PC provider, unveiled its next-generation edge AI platform at GTC 2026. Powered by NVIDIA Jetson Thor and IGX Thor modules, the platform delivers high performance with low power consumption and targets key real-world AI applications:
Beyond device-level integration, Taiwan’s leading system manufacturers are expanding cross-domain collaboration with global partners in smart manufacturing. Foxconn and Delta Electronics are leveraging NVIDIA’s Omniverse and Isaac platforms to develop next-generation AI factories, integrating advanced simulation and digital twin technologies into Autonomous Mobile Robots (AMRs) and automation systems.
This progress highlights Taiwan’s growing ability to deliver full-stack, end-to-end solutions—from core computing modules to system integration—supporting turnkey factory deployments. It also reinforces Taiwan’s role as a key hub for collaboration among global AI leaders, accelerating the large-scale commercialization of physical AI across logistics, healthcare, and advanced manufacturing.
As the global AI industry transitions from infrastructure buildout to physical AI applications, Taiwan has evolved from a hardware manufacturing base to a key partner in the global AI ecosystem. Going forward, the focus lies in deepening international collaboration and industry promotion, from component-level development to system integration and large-scale deployment.
Looking ahead to 2026, challenges remain, including constraints on advanced packaging capacity and shortages of high-end materials. However, through continued innovation and close collaboration with global partners, Taiwan is well positioned to strengthen its role in enhancing supply chain resilience and delivering integration value to the global AI ecosystem.
Source： Industrial Technology Research Institute (ITRI) Industry Service Center Research Team
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