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The output of Taiwan's IoT industry has exceeded NT$1 trillion and it has become a new trillion-dollar industry. Rapid advancements in 5G and AI have expanded the range of IoT applications and facilitated the development of many innovative services. The "Asia Silicon Valley Development Plan 2.0" leverages the advantages of Taiwan's ICT industry and uses the three major strategies including the expansion of AIoT technology applications, improving the development environment for startups, and consolidating system output capacity to transform Taiwan into a key force for digital innovation in Asia.


  • Strong terminal and component supply chains

  • Platform advantages of rapid manufacturing, verification, and shipping

  • Taiwan, with an average ICT service and network penetration rate of more than 80%, provides a complete infrastructure environment

  • Taiwan offers 78 co-working spaces, seven public venture spaces, and 93 incubation centers

  • Taiwan has advantages including a complete semiconductor supply chain, an abundance of engineering talent for R&D and design, and proximity to emerging markets in Asia. In addition, ICT companies in Taiwan have actively expanded into vertical IoT applications and system integration solutions. Through investing in Taiwan, foreign companies are able to implement high-end parts and components/software design and development technologies, and search for module, subsystem, and application developers to work with, then jointly develop the targeted vertical IoT application markets.

  • The rise of IoT technologies in recent years has given birth to multiple innovative applications. To accelerate the development of emerging application markets in the industry, the Taiwanese government has established many startup parks and incubation centers to cultivate teams/companies that specialize in emerging applications in the semiconductor and smart IoT industries.

  • For instance, the Taiwan Tech Arena promoted by the Ministry of Science and Technology (MOST) has introduced accelerators for IoT and other technologies, and approximately 15 IoT startups have set up operations. In addition, the MOEA's Industrial Development Bureau has set up incubation centers in Nangang in Taipei and Qianzhen in Kaohsiung to cultivate teams/companies that specialize in emerging applications in the semiconductor and smart IoT industries. It has also established the "IoT Service Hub" in Taipei, Taichung, and Kaohsiung to provide cross-sector software and hardware technology integration, cloud platform connection, product design, market development, and data application resources to help IoT products with potential to attain mass production and enter the market.

  • The IoT framework consists of a sensor layer, network layer, and application layer. Sensor technologies in the sensor layer play a crucial role, not only involving the integration of hardware sensor components/circuit design and integration, but also software technologies for integrating multiple sensor signals and special algorithms for integrating AI and edge computing. Foreign companies that invest in Taiwan can invest in optical/3D vision sensors, biomedical sensors, or gas sensors for environmental protection and food safety. They can partner with smart vehicle and smart manufacturing testing facilities in Taiwan to jointly develop key sensor technologies that meet demands particular to the markets of Taiwan and elsewhere in Asia.

  • The COVID-19 pandemic has had a tremendous worldwide impact. The "contactless economy" has emerged as a new trend and the demand for working from home, online meetings, digital courses, telemedicine, video and audio entertainment streaming, and digital financial payments has increased dramatically. There is also potential for growth in the smart manufacturing, robotic warehousing, and service robot market. By investing in Taiwan and exploring business opportunities in the "contactless economy," foreign companies can use Taiwan's ICT, machinery, and medical equipment industries and testing facilities to develop innovative IoT applications.

  • Taiwan is deeply trusted by international corporations due to complete regulations that fully protect their intellectual property rights and information security. Next, the Taiwanese government and companies are fully aware of trends in the global industry, and flexibly adjust their supply chains based on changes in international economic and trade conditions. Foreign companies that invest in Taiwan or partner with Taiwanese companies will be able to reduce the risks and costs brought by the U.S.-China trade and technology conflicts and the global pandemic.

Focus of Policy - Asia Silicon Valley Development Plan 2.0

  • Expansion of AIoT technology applications: Accelerate the research and development of key AIoT technologies, expand applications for domestic 5G open networks, and use digital technologies such as 5G and AI and joint learning to develop innovative services such as smart transportation and smart business and facilitate the development of Smart City Taiwan.
  • Improving the development environment for startups: Expand investment financing (e.g., NT$10 billion in the Angel Investor Program and NT$60 billion in Youth Start-up Loans). Enhance incentives for professional international talents to come to Taiwan and facilitate communication and cooperation in the industry. Plan the Shalun and Asia New Bay Area 5G AIoT Innovation Parks and help startups connect with international resources. Create the national startup brand "Startup Island TAIWAN" and use the startup indicator "Next Big" step onto the international stage together. Create a startup information platform and gain insights on Taiwan's startup eco-system.
  • Consolidating system output capacity: Help domestic IoT companies or startups intensify their cooperation with international companies, strengthen the connections and communication between Asia Silicon Valley industry clusters and the international community, and use cooperation with foreign companies or industry investments or establishment of smart industrial parks in Taiwan to help export AIoT solutions to target countries of the New Southbound Policy and other international markets.

Tax Incentives

  • The profit-seeking enterprise income tax rate is 20%.
  • Up to 15% of the company's R&D expenditures may be deducted from its profit-seeking enterprise income tax for current year; or up to 10% of such expenditures may be credited over three years against the profit-seeking enterprise income tax payable by the company.
  • Royalty payments to foreign companies for imported new production technologies or products that use patents, copyrights, or other special rights owned by foreign companies is, with the approval of the Industrial Development Bureau, MOEA, exempt from the corporate income tax.
  • Imported machinery which local manufacturers cannot produce are eligible for duty-free treatment.
  • Investment in smart machinery/5G: For investments of no less than NT$1 million and no more than NT$1 billion, either "5% of investment spending deducted from profit-seeking enterprise income tax (current FY)" or "3% of investment spending deducted from profit-seeking enterprise income tax, if total spending spread over three years" may be selected, but the total amount deducted may not exceed 30% of corporate income tax that year. The applicable period is expected to be extended to December 31, 2024.
  • A company employee who has obtained stock compensation worth a combined total of less than NT$5 million and continuously held the stock while remaining in the company's employ for at least two years may choose to be taxed on the market price of the stock at either the time the stock was obtained or the time the stock is sold, whichever is lower.
  • Foreign special professionals who meet criteria are eligible for a 50% deduction of total income tax for amounts exceeding NT$3 million.
  • Companies that set up operations in export processing zones, science industrial parks, or free trade ports are eligible for exemptions on import duties, commodity tax, and business tax for the import of machinery and equipment, ingredients, fuel, materials, and semi-finished products for their own use.
  • Companies that use undistributed earnings to engage in substantive investments may exclude the amount when calculating their profit-seeking enterprise income tax.

Research and Development Subsidies



Success Stories

Digital Transformation and Cooperation
  • Microsoft created the Microsoft Startup Accelerator in the "Startup Terrace" in 2019 to help startup teams build up stronger technical capabilities. It also leverages opportunities for industrial collaboration with Microsoft to help startups and businesses find the right partners, connect with partners in Microsoft's global ecosystem, and expand domestic and international markets.
  • In August 2020, Microsoft and the Ministry of Economic Affairs jointly launched the second stage of an initiative aimed at upgrading IoT services and established the IoT Center of Excellence with the aim of providing business solutions to Taiwanese providers of electronics and network communication products, semiconductors, and precision manufacturing services. The program aims to help more Taiwanese companies use Microsoft's platform to accelerate innovation and create an output value of over NT$10 billion.
Development of Smart Applications
  • Merck, a major pharmaceuticals company in Germany, entered into a collaborative project with Instant NanoBiosensors Co., Ltd., a biomedical startup company in Taiwan, in 2020. They plan to market the "Light Sensing Biomarker Analyzer," developed by Instant NanoBiosensors, across the world and help Merck continue its development in digital medical services.
Talent Development
  • Microsoft announced the recruitment of 100 software and hardware R&D personnel in early 2021 for Azure Maps, Data Annotation, Devices Software & Quality Organization (DSQO), and Azure Hardware Systems & Infrastructure (AHSI). It regards Taiwan as a core cluster for R&D of key global technologies and has accelerated the adoption of advanced technologies in Taiwan's industries.
  • Google continues to promote the "Intelligent Taiwan" program and various talent training programs in Taiwan and provides free learning resources. Google launched the "Google University Relations Program" in Taiwan in May 2020 and expanded the scope of the Intelligent Taiwan program to provide more resources for the development of computer science in Taiwan.

Source: InvesTaiwan


Key Innovative Industries in Taiwan - Internet of Things (9.43MB)