Overview
Taiwan has made significant strides in developing its digital economy, establishing itself as a global leader in multiple high-tech sectors. The current administration has proposed a record high budget for 2025 that includes a significant increase in allocated spending for digital infrastructure projects to develop critical emerging technologies (CETs) such as artificial intelligence (AI), quantum computing, cybersecurity, among other high-tech industries. These initiatives build on the success of the “Digital Nation & Innovative Economy Development Program (DIGI+) 2017-2025 (DIGI+) ” that was first launched by Taiwan’s Executive Yuan (EY) in 2016 with a mandate to develop multiple high-tech sectors to support industrial innovation and move towards becoming a ‘smart island’. The DIGI+ plan incorporates advanced digital technologies such as deep cultivation of Taiwan’s data assets, Beyond 5G satellite communications, Å-generation semiconductors, digital transformation of cloud-based industries, and advanced network construction. With significant budget to support these initiatives, the Taiwan authorities through the DIGI+ plan have accelerated the development of five strategic industries and aims to achieve the following overall indicators by 2025:
Innovative Digital Economy
Digital economy scale reaches US$203.1 billion, and the proportion of the digital economy to GDP grows to 29.9%.
Digital service economy output grows to US$90.6 billion.
Vibrant Network Society
The penetration rate of digital lifestyle services among the public reaches 80%.
The proportion of the population with individual digital competitiveness reaches 60%.
Superior Broadband Environment
- High-speed broadband services reach 2Gbps (with 90% coverage).
- 5G network coverage for non-rural populations reaches 85%.
Taiwan ranked 9th in the 2023 Global Digital Competitiveness Index and ranked first globally in five individual indicators, making it a key player in the global digital economy, attracting foreign investment and driving innovation across the island. However, market challenges do exist for U.S. companies operating in the digital economy, as many regulations and policies for governing the critical emerging technologies such as AI are still being drafted by the Taiwan authorities. Bureaucratic processes do exist for public entities to adopt emerging technologies such as cloud services for the financial services industry, although progress is being made in this regard.
The Personal Data Protection Act (PDPA) is the primary law governing the collection, processing, and utilization of personal data in Taiwan. The PDPA was promulgated the in 1995. Taiwan is actively working to align the PDPA with international standards, such as the General Data Protection Regulation (GDPR) and Cross-Border Privacy Rules (CBPR). As a member of the Asia-Pacific Economic Cooperation (APEC), Taiwan joined the CBPR in 2018 as the seventh economy to join platform. The Institute for Information Industry (III) in Taiwan was recognized to be the nineth Accountability Agent in 2021 to help promote and certify Taiwan companies complying with CBPR.
In May 2023, Taiwan’s Legislative Yuan (LY) passed an amendment to the PDPA in response to increasing data breaches and a Constitutional Court ruling. The amendment significantly raises fines for data breaches up to US$500,000 for severe violations. Additionally, the amendment establishes the Personal Data Protection Commission (PDPC) as an independent authority to enforce data protection laws, with a preparatory office founded in December 2023 and full operational status aimed for 2024.
While Taiwan’s Personal Data Protection Act (PDPA) doesn’t explicitly mandate data localization, certain sectors, such as financial services and healthcare, do have additional regulations that impose specific data storage requirements. For example, the Financial Supervisory Commission (FSC) has regulations regarding the storage of customer data for financial institutions.
Market Challenges
Taiwan’s regulatory environment for the digital economy is a complex interplay of domestic laws, international agreements, and evolving technological advancements. While Taiwan authorities have strived to create a supportive environment for digital innovation, there are still areas that require further attention and improvement. For example, the current Government Procurement Act has not kept pace with the rapid changes in digital and software projects. This includes the undervaluation of software and services, and the need for more equitable and flexible collaborative contracts for software development. There is also a lack of reasonable pricing standards for services provided by professional personnel such as cybersecurity experts, and AI specialists.
As a countermeasure, Taiwan established the Ministry of Digital Affairs (MODA) in 2022 to oversee and promote Taiwan’s digital development, including coordinating policies related to telecommunications, information security, and the internet. The private sector expects that MODA could enact universal laws and standards for digital governance of these policies; however, to date the ministry has not been given any tools for enforcement which hampers its ability to effectively implement policy.
Another regulatory challenge for companies operating in Taiwan is the 60-day public notice and comment period for new and amended regulations is often circumvented. While the executive orders stipulate public notice requirements for regulations impacting international trade, investment, or intellectual property, many regulations affecting domestic commerce also have international implications. This oversight, coupled with a liberal interpretation of emergency exemptions, has created opportunities for regulators to implement policy without adequate or any public input.
For the financial services industry, the Insurance Bureau (IB) and the Securities and Futures Bureau (SFB) of the Financial Supervisory Commission issued in 2023 cloud outsourcing regulations for insurance, securities, and futures companies. These regulations duplicated the approach of the Banking Bureau (BB). However, the IB and the SFB did not provide a 60-day public comment period for interested parties, including cloud service providers and financial institutions, to review and comment on a draft of the regulations. The failure to provide a 60-day comment period is in contrast to the BB’s customary approach. In addition, while the SFB issued a guideline with its cloud outsourcing regulations, the IB did not release any further guidance or instructions, which has created uncertainties for cloud service providers seeking to sell into the insurance market in Taiwan.
Given the transformative power of AI across various industries and the potential risks it poses to individuals and society, countries worldwide are seeking to establish guidelines and principles for AI governance. On July 15, 2024, Taiwan National Science and Technology Council (NSTC) released a draft of the AI Basic Law for 60-day public comment, outlining the fundamental values for Taiwan’s AI development. The draft law includes seven principles and four key promotion points. The seven principles are Sustainable Development, Human Autonomy, Privacy Protection, Information Security, Transparency and Explainability, Fairness and Non-discrimination, and Accountability. The four key promotion points are Innovation Cooperation and Talent Cultivation, Risk Management and Responsible Application, Rights Protection and Data Utilization, and Regulatory Adjustment and Business Review. The draft AI Basic Law has outlined a blueprint for both innovative development and safe application. However, it requires inter-ministerial efforts to adapt their jurisdictions and regulations to keep pace with AI innovation, which has created uncertainties for companies operating in this industry on how to comply with the forthcoming regulations.
Digital Trade Opportunities
Cross-Sector Enabling Technologies
Taiwan’s National Science and Technology Council (NSTC) proposed to budget US$ 4.99 billion on technology development in various industries and programs in 2025. The budget would be used in assisting industries in adopting digital technologies and achieving net-zero emissions, ensuring equitable development across the island, strengthening communication networks and infrastructure and developing advanced healthcare solutions using AI. The budget will invest in key sectors, not only the five trusted industry sectors (semiconductors, AI, military, security, and next-generation communications) but also net-zero technologies, supporting SMEs and startups, and smart healthcare solutions.
In February 2023, the NSTC released the AI Action Plan 2.0 to address their strategy on developing AI talents, technologies, and industries from 2023 to 2026. The Plan focuses on technological advancement, regulatory support, and international cooperation to foster innovation and growth in the AI sector. Taiwan plans to leverage existing strengths built upon Taiwan’s semiconductor and ICT expertise to drive AI innovation, and to use AI to solve societal challenges and improve quality of life and they are keen on working with innovative American companies to achieve these goals.
Due to the explosive growth in AI-related applications and the escalating demand for high-speed transmission, Taiwan’s photonics and quantum industries have shown remarkable performance. In 2023, Taiwan’s photonics industry achieved a revenue of US$ 6.5 billion, marking a significant 44.4% growth from previous year. Taiwan stands out globally for its excellence in photonics, semiconductors, and information and communication technology. Notably, Taiwan introduced its first five-qubit superconducting quantum computer in early 2024. With the formation of a National Quantum Team that includes industries, authorities, academia, and research institutions, Taiwan is making long-term investments in quantum technology development and critical component manufacturing.
Recognizing the importance of the photonics and quantum sectors for national security, Taiwan authorities and industries are actively investing and engaging in collaborations with the United States. For instance, CS Taiwan led an investment mission to visit tech hubs in Colorado and Montana in June 2024. The Taiwan delegates are now keen to explore partnerships to integrate into the U.S. supply chain companies and expand their presence in the United States.
Specific Industry Sub-sectors
There is demand for U.S. telecom software companies to form new joint solutions for 5G with Taiwan telecom hardware suppliers. Next-Generation networks, such as 5G, are becoming software-defined, virtualized systems with cloud-based architectures. Taiwan hardware manufacturers are seeking to collaborate with international partners including from the United States to develop new telecommunications applications that could be sold in Taiwan and eventually be exported to other markets.
In 2022, the National Development Council (NDC) established its first 5G testing field to encourage local ICT companies to meet international standards and advance innovative Open RAN applications for its 5G Smart City programs. The goal of this initiative is to develop new Open RAN applications that combine U.S. software with Taiwan telecom hardware products and export them to other markets. The Ministry of Economic Affairs (MOEA) is also organizing a series of broadband/Open RAN seminars and competitions, inviting U.S. system integrators and state economic development offices to attend and explore potential business opportunities with Taiwan companies.
In June 2023, MODA announced the 5G Private Network Project, which allows providers to apply for licenses of up to ten years. U.S. telecom-related software and cloud service providers are encouraged to partner with Taiwanese firms for this program. To address spectrum interference concerns, MODA requires applicants to coordinate with local offices and include cybersecurity maintenance plans in their applications.
The requirement for cybersecurity maintenance plans stems from the fact that Taiwan receives a disproportionately high number of cyberattacks (MODA estimates that digital networks across the island received 30 million attacks per month in 2022). Due to its geographical position, Taiwan is a testing field for hackers that deploy a significant number of Advanced Persistent Threat (APT) attacks daily. Moreover, cyber criminals are increasingly targeting private industry by exploiting loopholes in smart manufacturing supply chains and low latency in 5G networks. Thus, cybersecurity has become a key focal point for maintaining industrial competitive advantage. MODA will continue to press for first-class cybersecurity capabilities in the defense, critical infrastructure, semiconductor, and telecommunications industries.
The Taiwan authorities recently announced its Zero Trust Architecture (ZTA) demand under the National Cybersecurity Development Program from 2021-2024, by following the National Institute of Standards and Technology (NIST) SP 800-207 standards released in 2020. According to the National Institute of Cyber Security (NICS) under MODA, the ministry will allocate funds for the Tier A Taiwan authorities’ agencies to adopt the ZTA standard.
According to the Taiwan Financial Service Roundtable, Taiwan financial institutions invested a total of US$916.3 million in fintech development in 2022, a significant increase of US$420.7 million compared to 2021. The primary reasons for this surge include continuous system and hardware investments by financial institutions and the capital investment from the financial holding companies into the internet-only banks, leading to an almost 85% increase in investment. For 2023, the projected investment was estimated at US$1.15 billion (growth of 26.0%), indicating the growing importance of technology adoption to the financial institutions. In 2022, the FinTech investment was allocated to systems and hardware (70.9%), followed by investments in fintech companies (12.6%) and research and development (16.5%).
Financial institutions intend to invest in FinTech companies primarily focused on information integration and aggregation platforms to enhance their own digital transformation. The key areas include cybersecurity solutions, regulatory technology (RegTech), intelligent wealth management, payments, InsurTech, lending, and digital assets.
The Taiwan Financial Supervisory Commission (FSC) released FinTech Roadmap 2.0 in August 2023 as a commitment to optimize legislation, enhance resources, expand technologies, and increase inclusiveness. The goal of this roadmap is to continue encouraging innovation and to establish up-to-date guidelines for technology adoption such as cloud services and AI, both areas for U.S. companies offer a competitive advantage.
Digital Economy-related trade events
Automation Taipei
Dates: August 20-23, 2025
Location: TaiNex Hall 1 & Hall 2, Taipei
Introduction: Starting from 1987, Automation Taipei has been one of the leading trade shows in automation industry in Taiwan. Overall, there are six showcasing theme, including smart manufacturing, industrial supply, key components, artificial intelligence, smart services, and service robot. Last edition in 2024 welcomed more than 800 exhibitors from around the world.
CYBERSEC
Dates: April 14- 17, 2025
Location: TaiNex Hall 2, Taipei
Introduction: Organized by iThome, CYBERSEC, is the largest annual cybersecurity event in Taiwan. Since 2015, we have been gradually becoming the dominant platform for international exchange on cybersecurity. CYBERSEC has more than 10,000 participants every year and become the high-profile cybersecurity annual conference and exhibition in Asia.
COMPUTEX
Dates: May 20-23, 2025
Location: TaiNex Hall 1 & Hall 2, Taipei
Introduction: Established in 1981, COMPUTEX TAIPEI (also called COMPUTEX) is the leading global ICT and IoT show with a complete supply chain and ecosystems. Co-organized by the Taiwan External Trade Development Council (TAITRA) and Taipei Computer Association (TCA), COMPUTEX, based upon Taiwan’s complete ICT clusters, covers the whole spectrum of ICT industry, from established brands to startups and from ICT supply chain to IoT ecosystems. With strong R&D and manufacturing capabilities and IPR protection, Taiwan is a strategic destination for foreign companies and investors looking for partners in global technology ecosystems
SEMICON Taiwan
Dates: September 4-6, 2025
Location: TaiNex Hall 1 & Hall 2, Taipei
Introduction: SEMICON Taiwan is a platform that connects Taiwan with global microelectronics ecosystems and a bridge that facilitates smooth collaboration between the industry, the government, academia, and research institutions. Witnessing enormous business collaboration, SEMICON Taiwan still stays true to its missions― Leading Technology Trends, Driving Technology Innovation, and Facilitating Collaboration and continues providing various channels and activities that meet the companies’ marketing and promotion needs. Parallel to the exhibition, there is also forum focus on quantum industry.
FinTech Taipei
Date: November 1-2, 2024
Location: Taipei World Trade Center Hall 1
Introduction: In recent years, fintech industry in Taiwan has come to the forefront, applications have flourished, and cross-border integration of financial and technological innovation has made financial services more efficient. In order to grow Taiwan’s fintech, and nurture startups and talent, guided by the Taiwan Financial Supervisory Commission (FSC), the Taiwan Financial Services Roundtable (TFSR) jointly established a FinTech Development Fund with 13 units: banks, securities, futures, investment advisors, insurers, stock and futures exchanges, OTC, TDCC, FISC, JCIC, and NCCC. It is Taiwan’s first public welfare fund for fintech development.