2025/12/26

Development of the Semiconductor Industry and Taiwan’s Strategic Position in the Era of AI

In 2025, the global semiconductor market—driven by Artificial Intelligence (AI), High-Performance Computing (HPC), automotive electronics, and demand for high-speed communications—has fueled technology growth worldwide. A market once dominated by computing, memory, and communications is undergoing rapidly transformation due to Large Language Models (LLMs), the expansion of data centers, and the popularization of electric vehicles (EVs). This shift has fueled surging demand for high-end Graphics Processing Units (GPUs), AI accelerators, High Bandwidth Memory (HBM), and advanced packaging. The World Semiconductor Trade Statistics (WSTS) predicts that the global semiconductor market will reach USD 760.7 billion in 2026, with an annual growth rate of 8.5%, hitting a record high. Meanwhile, Semiconductor Equipment and Materials International (SEMI) forecasts global semiconductor manufacturing equipment sales to reach USD 138.1 billion in 2026. This reflects a broad expansion across the entire value chain—from upstream equipment suppliers to downstream chip manufacturers—and underscores that the industry’s growth momentum is increasingly driven by AI computing and the rapidly rising demand for data centers. Global Semiconductor Industry Development Trends The demand for training large-scale AI models has risen rapidly, making high-performance GPUs, AI server processors, and advanced packaging the focus of global technological development. US companies NVIDIA and AMD are launching new-generation AI accelerators and relying on global supply chains to expedite the buildout of High Bandwidth Memory (HBM) and advanced packaging capacity. As data centers continue to scale, the need for high-speed data transmission has grown sharply. The adoption of Co-Packaged Optics (CPO) and silicon photonics accelerated in 2025, with US companies including Intel, Broadcom, Cisco, Marvell, and NVIDIA, viewing optoelectronic integration as a critical strategy to increase bandwidth and reduce power consumption. The memory market has also re-emerged as a key driver of growth, as HBM delivers significant improvements in capacity and bandwidth. Micron in the United States, along with Korea’s SK Hynix and Samsung, have all ramped up related investments. In automotive electronics, demand for Microcontroller Units (MCUs), Insulated Gate Bipolar Transistors (IGBTs), silicon carbide MOSFETs (SiC MOSFETs), and in-vehicle sensors continues to climb, fueled by the growth of Advanced Driver Assistance Systems (ADAS) and electric vehicles. Power semiconductors and in-vehicle computing platforms are seeing expanding applications as vehicle electrification and intelligence advance. As a result, both the volume and complexity of automotive chips are rising year by year, forming a strong and sustained source of momentum for the sector. Simultaneously, geopolitics continuously reshape the pattern of supply chain. The USA, EU, and Japan have extended subsidy policies aimed at promoting localization and diversifying risk, leading to a more geographically distributed global capacity layout. This trend has strengthened countries’ efforts to secure key manufacturing technologies and critical points within the semiconductor supply chain. Taiwan’s Semiconductor Industry: Advancing with Global Trends and Deepening International Collaboration Driven by rising demand for AI and HPC, Taiwan’s semiconductor supply chain is poised for accelerated expansion and cross-domain integration in 2025. As the advanced manufacturing capability and advanced packaging demand grow at the same time, the leading foundry and Outsourced Semiconductor Assembly and Test (OSAT) companies in Taiwan – TSMC, ASE Technology Holding, and Powertech Technology Inc., maintain high capacity and also lead the high-end Printed Circuit Board (PCB), heat dissipation, and server Original Design Manufacturer (OEM). The continued expansion of CoWoS (Chip on Wafer on Substrate), SoIC (System on Integrated Chips), and HBM production lines further strengthens Taiwan’s central role in the mass production of AI accelerators and data-center chips. In response to global trends in high-speed transmission and optoelectronic integration, Taiwan’s communications networking, photonics, and server supply chains are accelerating investment in CPO and silicon photonics. Taiwanese companies such as LandMark Optoelectronics and Luxnet Corporation are making significant progress in optical modules, optical engines, and high-speed transceivers, collaborating with server vendors to introduce next-generation designs. This allows Taiwan to expand beyond AI chip manufacturing to become a key supplier of high-speed transmission and optoelectronic systems. Foreign companies are also deepening their presence in Taiwan. With expansions in advanced manufacturing and packaging, major international semiconductor equipment and materials suppliers—such as Applied Materials, Lam Research, KLA, DuPont, and NITTOBO (Japan)—continue to strengthen their local engineering support, technical services, and spare-parts capabilities. According to SEMI, Taiwan is expected to remain one of the world’s largest semiconductor-equipment markets by 2026. The advancement of wafer fabrication, advanced packaging, and optoelectronic integration technologies encourages foreign firms to expand services and collaborative activities in Taiwan. Additionally, rising demand for CPO and silicon photonics has attracted foreign companies to partner with Taiwan’s supply chain in module validation, product development, as well as ramp-up mass production, which is accelerating the commercialization of next-generation optoelectronic technologies. Overall, Taiwan’s semiconductor industry in 2025 is undergoing a clear shift toward higher-value activities. AI-driven innovations are accelerating manufacturing capabilities and packaging technology, enabling high-speed transmission and the integration of optoelectronics, and prompting foreign companies to collaborate with local companies on technology. Together, these developments further reinforce Taiwan’s strategic position at the center of the global semiconductor supply chain. Conclusion The global semiconductor industry is entering a new era centered on AI, HPC, and automotive electronics. Advanced manufacturing capabilities and packaging have already become the commanding heights of global technological competition. The localization of the supply chain and risk diversification fortified reliance on a reliable manufacturing base. Taiwan continues to play an irreplaceable role in the global market with a complete supply chain, high-efficiency manufacturing, and a robust R&D foundation. Looking ahead, Taiwan retains a lead in AI chip manufacturing, advanced packaging, and specialized manufacturing capabilities, and continues to hold a key role in the global semiconductor ecosystem through cooperation with international enterprises to deepen supply chain connections.

2025/12/12

Swift Engineering and TaMiCo Technology Taiwan, Key Drivers of the Semiconductor Industry’s Upgrades, to Expand Production Capacity in Tainan

InvesTaiwan today (12th) approved the additional investment of 2 SMEs in Taiwan, including Swift Engineering Co., Ltd. and TaiMiCo Technology Taiwan Ltd. To date, the Three Major Programs for Investing in Taiwan have attracted over NT$2.5891 trillion in investments from 1,696 companies, and are expected to create 162,318 domestic employment opportunities. Of which, the Action Plan for Accelerated Investment by SMEs has attracted approximately NT$589.4 billion in investments from 1,151 SMEs, creating 41,080 domestic employment opportunities; applications of 14 companies are currently pending review. Swift Engineering Co., Ltd. is a professional manufacturer of facility management and control systems, piping assembly, and equipment, and provides one-stop integrated solutions from planning and design, manufacturing, construction and installation, to after-sales service. With its wealth of experience in the semiconductor, optoelectronics, and fine chemical industries, the company is able to meet the diverse needs of customers for plant expansion and process upgrade. Swift Engineering is able to execute multinational projects, an ability rare among local companies. It has participated in factory construction projects in numerous countries, such as the Kumamoto fab of Japan Advanced Semiconductor Manufacturing (JASM), which is a subsidiary of TSMC, and the Arizona plant in the United States, showing its important position in the international semiconductor supply chain. As its customers move on to new product generations and higher precision processes, Swift Engineering decided to invest over NT$400 million to build a new smart factory in Shanhua District, Tainan, and plans to hire an additional 14 local employees. The new plant will fully incorporate AI and smart manufacturing technologies to enhance the processing of pipe fittings and their system equipment. It will also install a solar PV system to gradually achieve energy conservation and carbon reduction. Swift Engineering will continue to expand its production capacity and increase the added value of its products through this investment, actively implementing its market strategy of being rooted in Taiwan while looking to the world. KoMiCo is the first company in South Korea to successfully commercialize semiconductor component cleaning and coating technology. Optimistic about the development of Taiwan's semiconductor industry, KoMiCo established TaiMiCo Technology Taiwan Ltd. in 2006, providing precision cleaning and special coating services for semiconductor equipment components. The company has gained the recognition of major semiconductor customers around the world for its outstanding professional capabilities and technical strength. TaiMiCo Technology Taiwan plans to invest over NT$1.4 billion to build a new plant and R&D center in Tainan Industrial Park, so as to maintain its core competitiveness and expand its product applications. The company plans to hire an additional 65 local employees. The company will utilize AI technology and a digital management system in its new plant to comprehensively increase its precision cleaning and coating capacity. The company will also increase the percentage of green electricity use to become aligned with the international trend of environmental protection. Going forward, TaiMiCo Technology Taiwan will continue to focus on cleaning and coating technologies, expand its scope of business, and actively develop manufacturing technologies for key components, such as semiconductor equipment chambers, striving to create maximum value for customers around the world. This is the first application from a foreign company since the “Three Major Programs for Investing in Taiwan 2.0” was launched this year, and the company has already publicly signed a letter of intent with the Ministry of Economic Affairs. TaiMiCo Technology Taiwan is committed to meeting customers' needs for the manufacturing and recycling of precision equipment parts, and aims to support the development of advanced processes and advanced packaging technologies in Taiwan's semiconductor industry. Spokesperson of InvesTaiwan: Acting COO Chen Ming-Chu Telephone: 02-2311-2031 Ext. 802 Mobile Phone: 0938-637-901 Email: nicole@invest.org.tw

2025/10/29

The Current Status of Development and Trends of the Silicon Photonics Industry.

Along with the rapid growth of Generative AI (GAI) and High-Performance Computing (HPC), global demand for high-speed data transmission keeps soaring. Traditional electrical signal transmission is limited by energy consumption and distance constraints, creating a bottleneck in the massive data flow generated during AI model training. Combining Silicon photonics technology with mature mass production and silicon processes, which feature high-speed and low-latency optical signals, has been considered the solution for the next generation. According to the forecast of MarketsandMarkets, the global silicon photonics market is expected to grow up to USD 9.65 billion in 2030, compared to USD 2.65 billion in 2025, indicating that the industry has entered a period of rapid expansion with a compound annual growth rate (CAGR) of nearly 30%. The Developing Trends of the Global Silicon Photonics Industry The development of Silicon Photonics and Co-Packaged Optics (CPO) is expediting the network upgrades of data centers and supercomputers. U.S.-based Broadcom will launch its third-generation 200G/lane CPO optical engine in 2025, moving toward the generations of 1.6T and 3.2T. NVIDIA, at the Hot Chips technical forum, unveiled its Graphics Processing Unit (GPU) optical interconnection blueprint, planning to introduce optical connectivity into network and switching platforms — underscoring its importance for future AI data centers. The Optical Internetworking Forum (OIF) has accomplished multiple interoperability demonstrations of high-speed interfaces, providing unified standards for the industry and reducing the risks of adopting technologies from different suppliers. An examination of development trends across regions include: The United States is focusing on chip-to-chip optical interconnection and the application of cloud data centers. U.S.-startup Ayar Labs has received investments from major chip and system manufacturers, including NVIDIA, Intel, GlobalFoundries, and Hewlett-Packard Enterprise, among others. Europe, connecting R&D resources from the Netherlands, Germany, and France through the Photon Delta Alliance, is aiming to attract EUR 1 billion in investment by 2030, to build a complete industrial ecosystem. Japan, led by Nippon Telegraph and Telephone Corporation (NTT), is promoting the Innovative Optical and Wireless Network (IOWN) project, adopting application of optical interconnection from circuit board to chip for a full-optical frame, reducing power consumption and enhancing network efficiency. Overall, the global silicon photonics industry has formed a diversified landscape characterized by “U.S. leadership in technology, Europe’s ecosystem-oriented approach, and Japan’s application-driven focus.” International Collaboration and Taiwan’s Competitive Edge in Silicon Photonics Major international corporations are not only expanding their presence in their respective markets — with the advancement of silicon photonics technology, Taiwan has become a key link in the global supply chain. The development of Taiwan’s silicon photonics industry has now begun to take shape, demonstrating three major strengths: technological breakthroughs, industrial clustering, and strong policy support. Technological Breakthroughs At SEMICON Taiwan 2025, TSMC (Taiwan Semiconductor Manufacturing Company) unveiled its COUPE platform for the first time, which uses System on Integrated Chips (SoIC) heterogeneous integration technology to combine electronic and photonic dies directly. TSMC showcased a 200G Micro Ring Resonator Modulator (MRM) and Wavelength Division Multiplexing (WDM) module, which are expected to be integrated into CoWoS (Chip-on-Wafer-on-Substrate) advanced packaging by 2026 — a major step toward CPO commercialization. This aligns with NVIDIA’s CPO roadmap, further highlighting Taiwan’s critical role in the global HPC supply chain. Meanwhile, the ITRI (Industrial Technology Research Institute) introduced Taiwan’s first 1.6 Tbps silicon photonic optical engine, collaborating with ASE (Advanced Semiconductor Engineering, Inc.) to establish an integrated one-stop resource of industry platform for design, manufacturing, and verification, and jointly promote the development of the silicon photonics industry. Industrial Clustering ASE and SPIL (Siliconware Precision Industries) are actively developing CPO packaging technologies. At the same time, Sigurd Microelectronics focuses on testing solutions for silicon photonics and CPO — filling the critical measurement and verification gap. Accton Technology has adopted silicon photonics in its switch products, and optical transceiver manufacturers such as LandMark Optoelectronics, Browave Corporation, and Fiber Optic Communications (FOCI) continue expanding capacity, forming a complete supply chain. U.S. startup NLM Photonics has chosen to leverage Taiwan’s wafer manufacturing and testing ecosystem to accelerate the commercialization of advanced optical materials. At the same time, Taiwan’s startup Rayleigh Vision Intelligence introduced a low-power optical engine solution and plans to collaborate with local Outsourced Semiconductor Assembly and Testing (OSAT) partners for mass production — reflecting Taiwan’s dual advantage in international collaboration and domestic innovation. Policy Promotion In 2025, the Executive Yuan launched the “Ten AI Initiatives Promotion Plan”, designating silicon photonics as one of its three core technologies to be supported by cross-ministerial R&D funding. Taiwan is poised to expand its influence within the global industry value chain through international cooperation and standardization platforms, as SEMI Silicon Photonics Industry Alliance now includes over 100 domestic and international companies spanning wafers, materials, packaging, modules, and systems. Conclusion Silicon photonics and CPO have progressed from technical exploration to industrial implementation, with the global market expanding rapidly at an annual compound rate of nearly 30%. The SEMICON Taiwan 2025 forums and exhibitions further underscore silicon photonics’ strategic importance in the semiconductor industry. Leveraging its comprehensive manufacturing and advanced packaging capabilities — combined with R&D investments from ITRI, ASE, and others, as well as supportive government policies and global partnerships — Taiwan is steadily building a complete silicon photonics ecosystem. Looking ahead, as international collaborations deepen and commercialization accelerates, Taiwan is poised to become a global hub for silicon photonics, further strengthening its critical supply chain position in AI and HPC.

2024/9/30

Like a Slice of Pizza: TSMC Strikes Gold with New CoWoS Packaging Technology

The long-awaited big break in 3D integrated circuit (IC) packaging, which has finally come to pass in the age of AI, has been more than ten years in the making. Since its debut at SEMICON over a decade ago, when it took the semiconductor packaging sector by storm, TSMC’s CoWoS 3D packaging business has grown 60% every year. Now it is threatening to overtake the ASE Group and become the industry leader. What made TSMC Founder Morris Chang decide to buck the odds and compete in IC packaging? This column was published during SEMICON Taiwan 2024, the annual extravaganza for the global semiconductor industry. Technology leaders from around the world jetted in just to take part in the various forums held around Nangang Exhibition Center. Related discourses cover the latest trends, such as silicon photonics. The results of these dialogues could have a lasting impact on the semiconductor industry. TSMC’s CoWoS IC packaging technology, the revolutionary breakthrough in semiconductor manufacturing that’s the darling of Taiwan’s stock exchange, debuted at SEMICON 13 years ago. At the time, all that anyone in the field could talk about was “3D IC”. The idea was to pack multiple dies side-by-side on the silicon interposer at the wafer level to greatly enhance interconnect density and reduce chip footprint. Other industry giants such as the ASE Group and Siliconware Precision Industries Co. (SPIL) were champing at the bit to get in on the ground floor. Then a senior director from TSMC dropped a bombshell: TSMC was entering the 3D IC business, offering a simplified version of the advanced packaging technology to its clients. The thousand representatives of IC packaging companies were in agony. “Are you saying we are all out of a job?” the vice president of research and development at a major company asked in distress. During TSMC’s shareholders’ meeting a month later, Morris Chang (張忠謀) officially announced that TSMC was introducing its CoWoS “chip-on-wafer-on-substrate” technology. Like a middle school English teacher, Chang made sure that everyone pronounced the name correctly. Turning Mistakes into Miracles The rumor was that the backlash from the packaging industry was so fierce that Chang had to make a personal announcement to soothe the controversy and make it clear that he stood behind his company’s decision. The senior director who kicked things off was none other than Dr. Douglas Yu (余振華), Vice President of Pathfinding for System Integration at TSMC, who has recently been awarded a fellowship at Academia Sinica. He was the pioneer behind two of TSMC’s most groundbreaking technologies: CoWoS, which is used in high-performance computing, and InFO, which is used on mobile devices. The former is the darling of Nvidia’s GPUs; the latter is used in Apple’s self-developed computer chips. This was a whole new wellspring of revenue for TSMC. In his announcement, Chang declared the reason that TSMC was getting into the packaging business was to create “a clear ownership of [the] long process flow”. This reporter did not quite understand the explanation until years later. At its core, the question boils down to “who should pay—and how much should they pay—when something breaks?” Take Nvidia’s AI accelerator, the H100 GPU, as an example. If its architecture was a slice of Hawaiian pizza, the ham on top would be the 4-nanometer GPU chips, and the pineapple pieces would be High Bandwidth Memory (HBM). The cheese below would be the silicon interposer, which rests atop the dough—the IC substrate. When packaging companies talk about working with 3D IC, think of it as TSMC making the “ham” and selling it to ASE or SPIL, who then buy the “pineapple” from SK Hynix Semiconductor to combine everything into a slice of pizza. A packaged H100 chip costs over US$30,000. Just the “ham” made by TSMC costs a few thousand dollars. Packaging companies face a harsh reality. The “cheese” in the middle, the silicon interposer, requires wafer-level manufacturing expertise. It is extremely difficult. Failure would mean that the expensive “ham” on top would be kaput as well. Herein lies the point of contention. TSMC’s profit margin is over 50%, which means its “ham” has a price tag that’s double the cost. But if TSMC did the packaging itself, the cost of failure would not include the lucrative profit margin. “If they break it, they buy it. But if I break it, I have to pay twice as much. Of course it’s hard to compete,” Mike Ma (馬光華), the former vice president of research and development at SPIL who single-handedly built its advanced manufacturing line, explained the dilemma to this reporter some years ago. Even if packaging companies quoted the lowest price possible, they still couldn’t compete. Ultimately, this led to TSMC monopolizing the field of advanced IC packaging. New Hope for IC Packaging The big break in 3D IC, which the packaging segment of the semiconductor supply chain has waited for all these years, is finally on the cusp of realization thanks to generative AI. The manufacturing of the H100 chips has been limited by the production capacity of CoWoS. TSMC has agreed to give some of its orders to ASE and the American company Amkor Technology. However, this is restricted to the latter half of the CoWoS process. In other words, it’s the final phase when all the toppings are placed on the “dough”, or the IC substrate. Industry veterans point out that TSMC has already accrued over a decade of mass production experience. “They are taking it easy because they are so far ahead.” But they also stipulate that contactors replicate TSMC’s process with zero variation, down to the equipment, materials, and production parameters. The substantially more challenging first half the process, “chip-on-wafer”, may also be outsourced to suppliers. ASE is gearing up for this once-in-a-lifetime opportunity. This is why its expenditure this year is a record-shattering US$3 billion. TSMC Chairman Dr. C.C. Wei (魏哲家) introduced a strategy he dubbed “Foundry 2.0” this July. The plan: expand the definition of wafer foundry to officially encompass packaging and testing. He feels that this new definition will offer a new shot at growth for TSMC. How big of a chance is it? For CoWoS, TSMC is projecting a CAGR of up to 60% between 2022 and 2026. Advanced packaging is just 10% of TSMC’s business. In a few years, if things move quickly, it could overtake ASE to become the world’s largest IC packaging company. During the 2024 Technology Symposium, TSMC unveiled a new iteration of CoWoS called “system-on-wafer”, or SoW. It can produce a massive chip that’s about the size of a 12-inch wafer. These products will be used in a new generation of data centers. It shows just how far TSMC’s technological dominance has come. In the past, chips were in a race to downsize. But due to demand from customers in the AI industry like Nvidia, a paradigm shift has occurred where the packaging process will churn out larger chips. Wei has admitted that TSMC is also branching out into panel-level packaging, where chip size is even less of a limitation. At the earliest, the new products will launch in three years. We should not be surprised if Nvidia CEO Jensen Huang (黃仁勳) wows the crowd with new AI chips that are the size of table tops.

2024/7/31

AI Foundries Offer Taiwan a Good Chance to Replicate TSMC’s Success

Taiwanese companies are currently profiting from the first wave of the AI revolution, but where will the next source of growth come from? Even Nvidia CEO Jensen Huang is exhorting the virtues of AI foundries—a system under which the creation of AI models is outsourced to contractors. This may give Taiwan’s AI supply chain a substantial competitive edge. In an exclusive interview with CommonWealth Magazine, Dr. Liang-Gee Chen (陳良基), Professor Emeritus of the Department of Electrical Engineering at National Taiwan University, posits that if Taiwan can leverage its advantages in hardware and software integration, it can become the island kingdom of the world’s most trusted AI foundries. Artificial intelligence (AI) is the latest iteration of the industrial revolution. At this moment, tech giants like Microsoft, Meta, and Google are competing over what is the most profitable way to work with hardware suppliers. In the semiconductor industry, on one end of the spectrum are “integrated device manufacturers”, or “IDMs”, represented by Intel. On the other end are companies like TSMC, which exemplify a more open approach to operating wafer foundries, one that revolves around specialization and division of labor. With regard to the tech industry, Taiwan’s decision to divide the work among different companies on the supply chain birthed an incredibly strong semiconductor sector. It also nurtured our hardware integration capabilities, which is why so many functions are now integrated into the microchips we make. In the age of AI, when everyone is using AI to do more than was previously possible, the question we should ask is: Who will be the supplier of AI? Current AI suppliers that appear to be far ahead of the competition are like chip suppliers in the early days of the semiconductor boom, such as Intel 40 years ago. What really infuses AI with new abilities is the data on which it is trained. If all our data is in the hands of the aforementioned tech leaders, like Microsoft, Google, and Amazon Web Services (AWS), then they themselves will become the new generation of IDMs, as users will rely on the AI models that they provide. Two years ago, I was already promoting the concept of the “AI Foundry”. I use the word “foundry” to convey the meaning that, no matter where the user is located, they can trust the AI that Taiwan provides. This is because in the age of AI, people are not as worried about computing power as they are about data. If we’ve already done the computing for you and given you a fine-tuned AI model, computing power becomes a less critical part of the equation. If this is where the AI industry is headed, then whoever becomes a trusted contractor that can take on outsourced AI workloads will become the most important supplier in the entire AI industry. To use the semiconductor industry as a familiar example, microchips make up the core of servers, while cloud service providers (CSPs) and computing providers form the second link in the supply chain. The final link comes from service providers who create AI models, such as OpenAI. Taiwan’s chance lies in this final link of AI model services. Taiwan can offer the world an open environment where users of AI models don’t need to surrender their data to a monolithic IDM. Instead, they can outsource the training and fine-tuning of their AI models, just as they did with microchips. It goes without saying that the contractor must be able to be trusted not to leak precious and sensitive data. Taiwan Unrivaled in OEM/ODM Taiwanese companies have made a name for themselves on the world stage because they are unrivaled when it comes to OEM and ODM—outsourced contracting work. The world trusts that the job will get done if it is in the hands of a Taiwanese company. Therefore, it won’t take long for international clients to get used to a new model in which data is delivered to Taiwanese vendors for AI development. The clients control their own data and can make adjustments as they see fit. They are not restricted by the rules of existing IDMs, i.e. “If GPT4.0 is what’s available, that’s what you're using; if there’s an update, then you’d better get on-board.” Nowadays, if a company wishes to use AI, it must hand over its data to OpenAI for training. In the end, OpenAI controls all the information. But is OpenAI’s business model trustworthy? TSMC is trusted because it doesn’t compete with its customers. Will OpenAI compete with its customers? Right now, there’s no way to know. How OpenAI fine-tunes its data is also a huge unknown. The whole thing is very different from the semiconductor industry. With semiconductors, when you outsource to TSMC, not only are you certain that it will not compete with you, you can also tell TSMC what design you want as well as what you want to adjust. Everything that is discussed is confidential and will not be released to the public. But when you give your data to OpenAI, you are in fact helping them to train their AI models. OpenAI owns all of your data. For this reason, many big companies prohibit their employees from using AI services from OpenAI. What Customers Need is a Business Model Where They Control their Data Hence, the common pain point of enterprises is this: Is there an unrestricted AI development tool that can be controlled by the user? This is a chance for Taiwan to demonstrate its strengths. We already have the hardware, and the quality of our work is universally trusted. We can leverage that trust to invite enterprises to let us work with their data and develop the perfect AI model for them to use. In a future where every profession is using AI, it is imperative for AI suppliers to allow their users to exert tighter control over their data and enjoy absolute peace of mind. OpenAI is a closed system; users may only need a smaller model to get the job done. For example, a user who requires art design services does not need the AI to also know how to write poems. If we can get a clearer picture ahead of time of what sort of know-how and knowledge are required, we will be able to tell when a smaller AI model will suffice, which cuts down on the amount of computing resources that are needed. In many ways, Apple is already headed in this direction. Taiwan controls the microchips at the heart of AI hardware. Therefore, if we know what customers are looking for, we can simplify the workload for them, to the point that we may even be able to recommend more cost-effective hardware configurations. In summary, the “AI foundry” service needs both hardware and software integration. In all the world, no one does this better than Taiwan. A time will come when every industry needs more independent AI models. The IDMs of the current AI wave will face many challenges in the future, just as Intel had to learn how to outsource its manufacturing. This is because the current AI models are trained in a grab bag, one-size-fits-all fashion. It will not be easy for AI developers who built their success on this foundation to adapt to training smaller AI models. In the end, it all comes down to who controls the data, because that's where the money is. For example, TSMC has remarkable production prowess mainly because it adopted smart manufacturing early on. Smart manufacturing has already become mainstream; there are probably over 30 fully automated factories in Taiwan. This was made possible by collecting data and then using it to manage the factories. All the manufacturing know-how is in the data. That is why it is so important to control the data: It is a competitive advantage. Taiwan Can Invest in Open-source AI Models Taiwan can help train the world’s open-source AI models. That is why we are currently working with Lama3. When it comes to training AI models, Taiwan can work with anyone on Earth who is willing to provide open-source AI models. We can elevate this market; with Taiwan’s help, this can become our edge when competing with the IDMs of the AI world. The current IDMs have everything going for them, and if they invest in things that solve their customers’ pain points, they may continue to dominate the market. If Taiwan can put its full strength behind the plan outlined above, just as we did for the semiconductor industry, and if our policymakers can take into account Taiwan’s role in the supply chain of the world’s AI foundries—then Taiwan will have a greater chance to thrive in the age of AI. Read the full article in CommonWealth Magazine.