Taiwan has confirmed it will allocate over NT$100 billion (around US$3.2 billion) for a multi-year national AI infrastructure plan, to become a global leader in AI compute and hardware by 2040. Modeled on the industrialization blueprint that drove the country’s 1970s boom, the “AI island” initiative will fund ten flagship projects focused on large-scale AI compute clusters, research hubs for photonics and quantum technologies, and an expanded robotics industry built on Taiwan’s manufacturing base.
Taiwanese leadership has committed to making the country one of the world’s top five by computing power, with an economic goal of NT$15 trillion (about US$492 billion) in AI-driven output by 2040. But those ambitions are coming up against power supply bottlenecks, rising chip-related energy demand, and an increasingly volatile geopolitical environment.
The 2026 draft budget will include NT$30 billion for the initiative, with public funding joined by major private-sector investments from partners including Nvidia and Foxconn, which are building a 100 megawatt AI data center in Kaohsiung. The full national plan anticipates 500,000 jobs and three world-class research labs by 2040.
10 major AI projects
The “10 major AI projects” are being framed as a foundation for future AI innovation, with three core technologies — silicon photonics, quantum computing, and AI-enabled robotics — identified as its pillars. Dedicated research facilities and industrial consortia are being assembled to support each area.
Silicon photonics is the big one, given that it’s being positioned as the enabler for high-speed, low-latency chip-to-chip communication in AI processors, particularly as the industry shifts toward advanced packaging and chiplet architectures.
Quantum computing is also part of the roadmap, and the Ministry of Economic Affairs has earmarked funding for a vertically integrated domestic quantum technology ecosystem, from research labs and materials development through to potential system integration. While Taiwan is not currently a leading player in quantum hardware, officials say local expertise in precision fabrication gives it a huge advantage.
Meanwhile, AI robotics development is being folded into broader industrial automation goals. Foxconn and others are backing the new Taiwan AI and Robots Alliance, and several new robotics-focused R&D campuses are being proposed for southern Taiwan, including one near the smart manufacturing hub in the former capital of Tainan.
Taiwan’s industrial structure makes this strategy plausible. The country remains dominant in component manufacturing and integration. And with the global AI hardware market expected to exceed $400 billion by the end of the decade, local suppliers are racing to capture upstream design and packaging work from U.S. and Chinese firms.
Data center race hits an energy wall
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