Editorial: A U.S. View of Taiwan’s “Asian Silicon Valley” Initiative

February 1, 2017

A U.S. View of Taiwan’s “Asian Silicon Valley” Initiative

(Arlington, Virginia, February 1, 2017)

Editorial by Lotta Danielsson – Global Taiwan Brief

On September 8, 2016 Taiwan’s Executive Yuan (EY) formally approved the government plan to establish an “Asian Silicon Valley” (AVS) in northern Taiwan. The ambitious AVS initiative, with a planned implementation period through 2023, falls under the auspices of Taiwan’s Cabinet-level National Development Council (NDC). Implementation will also be supported by Audrey Tang, the young Minister without Portfolio charged with leading Taiwan’s digital economy push.

This initiative is intended to boost innovation and R&D, improve Taiwan’s standing in the emerging Internet of Things (IoT) industry, cultivate the next generation of entrepreneurs, encourage domestic start-up companies, and position the island as a key link in a global next-generation technology ecosystem. The ASV project was part of the “five innovative industries” plan laid out by President Tsai Ing-wen during her election campaign. Along with the “New Southbound Policy” it plays a key role in her plans to enhance Taiwan’s competitive edge, induce industrial transformation, and increase economic growth.

The project has faced some domestic scrutiny, with the Cabinet debating its viability during a series of meetings last summer. But in October 2016 the EY announced that a budget of NT$11.3 billion (US$358 million) had been earmarked for the ASV project. Funding was included in the Taiwan government budget passed on January 19, 2017. A portion will be new funding, with the remainder appropriated from existing budgets for government agencies within the Ministry of Science & Technology and the Ministry of Economic Affairs. The NDC has said that the 2017 ASV budget is allocated towards “internet infrastructure, mobile broadband services, e-commerce, smart applications, test beds, industry-university collaboration, digital talent, and regulatory adjustment.” Future year budget requests will be reevaluated on a rolling basis depending on need.

Taiwan had already taken steps towards deepening cooperation with Silicon Valley and encouraging start-ups and investments in new technology. This included creating the capital venture fund Taiwan Silicon Valley Technology Fund, opening a Taiwan Innovation and Entrepreneurship Center in Santa Clara, and establishing the Taiwan Startup Stadium in Taipei. But one of the first concrete steps towards implementation of the ASV project itself came in late December of 2016, when the NDC announced the opening of an Executive Center for the Asian Silicon Valley Plan near the high-speed railway station in Taoyuan in northern Taiwan.

Taoyuan, which is also home to Taiwan’s international airport, is an ideal location to house the headquarters for this initiative, as it is situated between the capital Taipei and the existing technology hub of the Hsinchu Science Park – already a major driver of innovation in Taiwan. Minister Tang has clarified, however, that the project is not about trying to clone Silicon Valley to a location in Taiwan, but rather about building out connections between the island and other centers of next-generation technology excellence both in the U.S. and in the rest of Asia.

In discussions with U.S. companies about the ASV project, there is some guarded optimism – although many companies are currently waiting and watching to see how the initiative unfolds. U.S. technology firms have expressed a willingness to partner with the government to realize the potential of Taiwan beyond the traditional hardware manufacturing on which it built its reputation as a technology hub. U.S. businesses may follow the example of Qualcomm, which in November last year signed a Memorandum of Understanding (MOU) with Taiwan’s Ministry of Economic Affairs to develop next-generation mobile communications and to expand Taiwan’s IoT capabilities. Qualcomm will join with Taiwan’s Industrial Technology Research Institute (ITRI) and with domestic companies to conduct R&D in Taiwan. The MOU also provides a framework for a long-term partnership between Taiwan and Qualcomm to expand and strengthen innovation and entrepreneurship on the island.

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