The Ministry of Economic Affairs yesterday said it would offer higher tax incentives for research and development (R&D), and for advanced equipment investment for local firms that are important links in global supply chains, such as semiconductor companies.
The ministry plans to raise tax benefits for companies’ R&D efforts to a 25 percent rebate on costs, compared with 15 percent currently, it said in a statement.
The ministry also plans to eliminate a tax deduction limit of NT$1 billion (US$33.63 million) on newly acquired advanced equipment, it said, adding that the 5 percent limit on overall new equipment spending is to remain unchanged.
Photo: Ritchie B. Tongo, EPA-EFE
The ministry said it expects the legislature to pass the measures, which would be added to the Statute for Industrial Innovation (產業創新條例), by the end of the year.
The move comes as the world’s major economies — including the EU, Japan, South Korea and the US — plan tax incentives and substantial subsidies to bolster key components and semiconductor supply chains at home, as supply chain resilience becomes a national security issue for some nations, the ministry said.
The US seeks to push through the Creating Helpful Incentives for Producing Semiconductors for America Act to pump US$52 billion in subsidies for making semiconductors in the US, while the EU also plans to spend about 11 billion euros by 2030 to fund the development of semiconductor research, design and manufacturing capabilities, the ministry added.
Taiwan Semiconductor Manufacturing Co (台積電) has received a subsidy of ¥400 billion (US$3.01 billion) from the Japanese government to build a new fab in Kumamoto Prefecture, the ministry said, adding that the chipmaker is also expecting to receive US subsidies for its new fab in Arizona.
“With countries around the world striving to achieve independence on key component supply, their actions could undermine the existing partnerships [with Taiwan], or bring new competitors,” the ministry said.
Such development “could further diminish the nation’s role in global supply chains,” it added.
To keep up with the incentives being offered in other countries, the “government should add new tax incentives to help strategically important local industries enhance their competitiveness,” the ministry said.
Tax relief and subsidies are being offered at home to safeguard Taiwan’s global role in the semiconductor, electric vehicle and 5G industries, the ministry said.
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Huawei Technologies Co’s (華為) latest smartphones carry a version of the advanced made-in-China processor it revealed last year, results from an independent analysis showed. This underscored the Chinese company’s ability to sustain production of the controversial chip. The Pura 70 series unveiled last week sports the Kirin 9010 processor, research firm TechInsights found during a teardown of the device. This is a newer version of the Kirin 9000s, made by Semiconductor Manufacturing International Corp (SMIC, 中芯) for the Mate 60 Pro, which had alarmed officials in Washington who thought a 7-nanometer chip was beyond China’s capabilities. Huawei has enjoyed a resurgence since