President Lai Ching-te (賴清德) has championed Taiwan as an “AI Island”—an AI hub powering the global tech economy. But without major shifts in talent, funding, and strategic direction, this vision risks becoming a static fortress: indispensable, yet immobile and vulnerable. It’s time to reframe Taiwan’s ambition. Time to move from a resource-rich AI island to an AI Armada.
Why change metaphors? Because choosing the right metaphor shapes both understanding and strategy.
The “AI Island” frames our national ambition as a static fortress that, while valuable, is still vulnerable and reactive. Shifting our metaphor to an “AI Armada” is a cognitive reset, forcing us to think in terms of mobility, coordinated action, and projecting power across the world’s digital oceans.
Taiwan is the backbone of global AI hardware. It fabricates over 60% of the world’s semiconductors and more than 90% [1] of advanced AI chips used by Nvidia, Google, and Microsoft. This dominance brings both pride and risk. One cyberattack, earthquake, or cross-strait blockade could fracture the global supply chain overnight.
To be fair, President Lai’s full vision is broader. His ‘10 new AI infrastructure initiatives’ [2] go beyond hardware to include building national supercomputers, developing a “sovereign AI” with Taiwan’s own foundational models, and investing in next-generation R&D like silicon photonics and robotics. But without a corresponding strategy for capital and talent, these initiatives will simply build a better fortress, not a mobile fleet.
Inspiring as the “AI Island” story is, it’s also limited. It reinforces Taiwan’s historic role as a contract manufacturer: essential, but reactive. “Taiwan doesn’t really have an AI [software] industry,” says Sega Cheng, CEO of leading Taiwanese AI software company iKala[3] , “We are part of the AI industry chain, primarily offering the computing power for AI applications worldwide.”
If Taiwan aims to shape the future of AI, and not just supply it, it needs an armada: a coordinated fleet of carriers, escorts, and scouts that moves, adapts, and projects influence globally.
The carriers are Taiwan’s hardware giants: TSMC, Foxconn, Quanta. These vessels project power but must also incubate new ventures through shared R&D and investment.
The escorts are AI-foundry and edge-computing startups like Kneron and Speedio—hybrids that merge hardware with software intelligence. Kneron, for example, secured US$97 million [4] from Foxconn to co-develop ultra-light NPU chips for secure, decentralized AI.
The scouts are global software startups. Firms like Appier [5] and Perfect Corp [6] reached billion-dollar valuations before listing in Tokyo and New York—proof Taiwan can produce software built for the world, not retrofitted for it.
But every fleet also needs harbors for ship building, fueling, and maintaining, and crew to steer and navigate the ships.
Taiwan’s AI Armada faces three headwinds: the gravitational pull of hardware, a shallow capital ecosystem, and a shortage of crew and mentorship. Each threatens to keep the nation’s AI ambitions anchored too close to shore.
The first is the pull of hardware. Taiwan’s unmatched semiconductor dominance is also a constraint.
“‘Why risk a startup when you can work for TSMC?’ is a real dilemma,” says journalist Matthew Chen (陳君毅), who has chronicled the island’s startup scene for nearly a decade. The gravitational security of corporate roles draws engineers back to the carrier decks, leaving the exploration fleet undermanned.
“Taiwan’s startup ecosystem is unique in its central paradox,” Chen observes. “We have a weakness in brand-building but an unparalleled strength in hardware–software integration.”
Still, a shift is underway. A “fourth wave” of founders, Chen says, is skipping local waters entirely and launching directly into Japanese or U.S. accelerators like Y Combinator. The instinct of companies like Appier and Perfect Corp is clear: set sail in deeper seas.
The government can and must accelerate this trend. It already has the right hulls in the water, such as the National Development Council’s “Startup Island TAIWAN” brand, which acts as a global promotion arm, and the Employment Gold Card, designed to attract foreign captains. But these efforts must be supercharged, moving from simple promotion to becoming full-service logistics bases for the ‘scout’ fleet, with dedicated launchpads in key markets like the U.S., Japan, and Europe.
The second is the shallow harbor of capital.
From 2016 to 2024, Taiwan produced just four AI startups per year on average, with fewer than 50 funded to date[7] , and only three reaching Series A. In 2023, 77.3% of startup funding stopped at the seed stage, and 44.3%[8] of founders cited lack of growth capital as their biggest challenge.
Despite a surge in AI startups since 2022, most remain unfunded. Total VC investment in 2024 reached just NT$9.8 billion[9] . This is less than half the funding in Singapore, which attracts 91% of Southeast Asia’s deep tech funding and boasts over 650 AI startups including 32 unicorns[10] .
Although the Ministry of Digital Affairs’ NT$10 billion “AI startup fund” [11] aims to address this gap over the next decade, it pales in comparison to the immediate scale required and risks being too little to deepen the harbor sufficiently.”
The third is the crew gap. Taiwan will need to train 200,000 AI professionals in the next four years and recruit 25,000[12] students annually.
While the Ministry of Education has responded to this need by launching the “Taiwan AI College Alliance” to create standardized AI programs across 55 universities, and the “AI Taiwan Action Plan 2.0” to cultivate thousands of new specialists, this will not meet the talent shortfall.
Even though Taiwan produces thousands of AI graduates every year, many go to better-paying markets abroad. Salaries in Taiwan remain a third of U.S. levels, and the long-hours culture discourages entrepreneurial risk.
“The real challenge” says Professor Yung-Chun Chang (張詠淳), Director of the Research Center for AI at Taipei Medical University, “is talent retention,”
Even those who stay often find themselves adrift. “We need a mentoring mechanism where experienced firms guide younger ones,” Chang adds. “But that’s tricky because competitors don’t naturally share knowledge, and the bigger players aren’t always the most innovative.”
Without structured mentorship, young captains repeat old mistakes, and the fleet stalls close to shore. The result are zombie startups, ghost ships set adrift.
Fellowship programs, equity-based pay, and founder guilds could help keep new talent aboard and learning.
Taiwan’s semiconductor carriers remain the pride of its fleet, but for how long? Without scouts, escorts, harbors, and crew, the island risks being stranded at the lower rungs of the AI value chain.
The AI Armada offers a mobile, living strategy: adaptive, global, and resilient. Taiwan’s future can’t be measured in wafers alone, but in the ability of its startups to sail, scale, and lead across the world’s digital oceans.
Many thanks to Tech Journalist Matthew Chen and Professor Yung-Chun Chang for their time and insights.
CommonWealth Magazine. (2021, April 8). Exclusive: How Appier became Taiwan’s first digital unicorn. https://english.cw.com.tw/article/article.action?id=2950
Crossley, B. (2025, Aug 7). Singapore’s $27B AI Revolution Powers Southeast Asia 2025. Introl. https://introl.com/blog/singapore-ai-revolution-27-billion-investment-2025
Foreign Workers’ News Agency. (2025, August 28). Taiwan to train 200,000 AI professionals in 4 years, attracting 25,000 overseas students annually. https://fwnews.com.tw/taiwan-to-train-200000-ai-professionals-in-4-years/
Kneron. (2023, September 26). Kneron Announces $49M in Additional Funding, Bringing Total Series B to $97M. Kneron. https://www.kneron.com/news/blog/183/
Meet Global. (2022, March 7). Taiwan’s third software unicorn Perfect Corp. is going to Nasdaq through SPAC. https://meet-global.bnext.com.tw/articles/view/47622
Ministry of Digital Affairs. (2025A). Taiwan and the Global AI Report (October 2025). Retrieved October 20, 2025, from https://www.roc-taiwan.org/uploads/sites/86/2025/09/October-2025-AI-report-20250917.pdf
Ministry of Digital Affairs. (2025B). “10 Billion to Support AI Startups” Public-Private Partnership to Jointly Invest in AI and Digital Industries. Retrieved October 20, 2025, from https://moda.gov.tw/en/ADI/news/latest-news/15758.html
PwC and TIER. (2023). 2023 Taiwan Startup Ecosystem Survey. 2023 Taiwan Startup Ecosystem Survey – PwC Taiwan
Taiwan Semiconductor Industry Association. (2025). Overview on Taiwan Semiconductor Industry (2025 Edition). Retrieved October 20, 2025, from https://www.tsia.org.tw/api/DownloadOverview?ID=35
Tracxn (2025). Top Artificial Intelligence companies in Taiwan. Tracnx.com. Artificial Intelligence in Taiwan - 2025 Market & Investment Trends - Tracxn
Wu, V. (2024, July 11). Taiwan’s AI dichotomy: leading the hardware revolution but lagging in software support. DIGITIMES. https://www.digitimes.com/news/a20240708VL211/taiwan-software-hardware-manufacturing-tsmc.html
[1]TSIA, 2025
[2] AI … Office of Science and Technology Polic
[3]Wu, V. (2024, July 11). Taiwan’s AI dichotomy: leading the hardware revolution but lagging in software support. DIGITIMES
https://www.digitimes.com/news/a20240708VL211/taiwan-software-hardware-manufacturing-tsmc.html
[4]Kneron, 2023
[5]CommonWealth Magazine. (2021, April 8). Exclusive: How Appier became Taiwan’s first digital unicorn. https://english.cw.com.tw/article/article.action?id=2950
[6]Meet Global. (2022, March 7). Taiwan’s third software unicorn Perfect Corp. is going to Nasdaq through SPAC. https://meet-global.bnext.com.tw/articles/view/47622
[7]Tracxn, 2025
[8]PwC/TIER, 2023
[9]MoDA-A, 2025
[10] Crossley, B. (2025, Aug 7). Singapore’s $27B AI Revolution Powers Southeast Asia 2025. Introl.
https://introl.com/blog/singapore-ai-revolution-27-billion-investment-2025
[11]“10 Billion to Support AI Startups” Public-Private Partnership to Jointly Invest in AI and Digital Industries｜Press Releases - Latest News｜Administration for Digital Industries, moda
[12]FWNA, 2025
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