President William Lai (賴清德) has championed Taiwan as an “AI Island” — an artificial intelligence (AI) hub powering the global tech economy. But without major shifts in talent, funding and strategic direction, this vision risks becoming a static fortress: indispensable, yet immobile and vulnerable. It’s time to reframe Taiwan’s ambition. Time to move from a resource-rich AI island to an AI Armada.
Why change metaphors? Because choosing the right metaphor shapes both understanding and strategy.
The “AI Island” frames our national ambition as a static fortress that, while valuable, is still vulnerable and reactive. Shifting our metaphor to an “AI Armada” is a cognitive reset, forcing us to think in terms of mobility, coordinated action and projecting power across the world’s digital oceans.
Illustration by Nigel P. Daly using ChatGPT5 and edited with Canva
FROM FORTRESS TO FLEET
Taiwan is the backbone of global AI hardware. It fabricates over 60 percent of the world’s semiconductors and more than 90 percent of advanced AI chips used by Nvidia, Google and Microsoft. This dominance brings both pride and risk. One cyberattack, earthquake or cross-strait blockade could fracture the global supply chain overnight.
To be fair, President Lai’s full vision is broader. His “10 new AI infrastructure initiatives” go beyond hardware to include building national supercomputers, developing a “sovereign AI” with Taiwan’s own foundational models and investing in next-generation R&D like silicon photonics and robotics. But without a corresponding strategy for capital and talent, these initiatives will simply build a better fortress, not a mobile fleet.
Photo: Reuters
Inspiring as the “AI Island” story is, it’s also limited. It reinforces Taiwan’s historic role as a contract manufacturer: essential, but reactive.
“Taiwan doesn’t really have an AI [software] industry,” says Sega Cheng (程世嘉), CEO of leading Taiwanese AI software company iKala, “We are part of the AI industry chain, primarily offering the computing power for AI applications worldwide.”
If Taiwan aims to shape the future of AI, and not just supply it, it needs an armada: a coordinated fleet of carriers, escorts and scouts that moves, adapts and projects influence globally.
THE FLEET
The carriers are Taiwan’s hardware giants: TSMC, Foxconn, Quanta. These vessels project power but must also incubate new ventures through shared R&D and investment.
The escorts are AI-foundry and edge-computing startups like Kneron and Speedio — hybrids that merge hardware with software intelligence. Kneron, for example, secured US$97 million from Foxconn to co-develop ultra-light NPU chips for secure, decentralized AI.
The scouts are global software startups. Firms like Appier and Perfect Corp reached billion-dollar valuations before listing in Tokyo and New York — proof Taiwan can produce software built for the world, not retrofitted for it.
But every fleet also needs harbors for ship building, fueling and maintaining, and crew to steer and navigate the ships.
HEADWINDS AND COURSE CORRECTIONS
Taiwan’s AI Armada faces three headwinds: the gravitational pull of hardware, a shallow capital ecosystem and a shortage of crew and mentorship. Each threatens to keep the nation’s AI ambitions anchored too close to shore.
The first is the pull of hardware. Taiwan’s unmatched semiconductor dominance is also a constraint.
“‘Why risk a startup when you can work for TSMC?’ is a real dilemma,” says journalist Matthew Chen (陳君毅), who has chronicled the island’s startup scene for nearly a decade.
The gravitational security of corporate roles draws engineers back to the carrier decks, leaving the exploration fleet undermanned.
“Taiwan’s startup ecosystem is unique in its central paradox,” Chen says. “We have a weakness in brand-building but an unparalleled strength in hardware–software integration.”
Still, a shift is underway. A “fourth wave” of founders, Chen says, is skipping local waters entirely and launching directly into Japanese or US accelerators like Y Combinator. The instinct of companies like Appier and Perfect Corp is clear: set sail in deeper seas.
The government can and must accelerate this trend. It already has the right hulls in the water, such as the National Development Council’s “Startup Island TAIWAN” brand, which acts as a global promotion arm, and the Employment Gold Card, designed to attract foreign captains. But these efforts must be supercharged, moving from simple promotion to becoming full-service logistics bases for the scout fleet, with dedicated launchpads in key markets like the US, Japan and Europe.
CAPITAL
The second is the shallow harbor of capital.
From 2016 to last year, Taiwan produced just four AI startups per year on average, with fewer than 50 funded to date, and only three reaching Series A. In 2023, 77.3 percent of startup funding stopped at the seed stage, and 44.3 percent of founders cited lack of growth capital as their biggest challenge.
Despite a surge in AI startups since 2022, most remain unfunded. Total VC investment last year reached just NT$9.8 billion. This is less than half the funding in Singapore, which attracts 91 percent of Southeast Asia’s deep tech funding and boasts over 650 AI startups including 32 unicorns.
Although the Ministry of Digital Affairs’ NT$10 billion “AI startup fund” aims to address this gap over the next decade, it pales in comparison to the immediate scale required and risks being too little to deepen the harbor sufficiently.
‘MENTORING MECHANISM’
The third is the crew gap. Taiwan will need to train 200,000 AI professionals in the next four years and recruit 25,000 students annually.
While the Ministry of Education has responded to this need by launching the “Taiwan AI College Alliance” to create standardized AI programs across 55 universities, and the “AI Taiwan Action Plan 2.0” to cultivate thousands of new specialists, this will not meet the talent shortfall.
Even though Taiwan produces thousands of AI graduates every year, many go to better-paying markets abroad. Salaries in Taiwan remain a third of US levels, and the long-hours culture discourages entrepreneurial risk.
“The real challenge” says Chang Yung-chun (張詠淳), Director of the Graduate Institute of Data Science at Taipei Medical University, “is talent retention.”
Even those who stay often find themselves adrift.
“We need a mentoring mechanism where experienced firms guide younger ones,” Chang adds. “But that’s tricky because competitors don’t naturally share knowledge, and the bigger players aren’t always the most innovative.”
Without structured mentorship, young captains repeat old mistakes, and the fleet stalls close to shore. The result are zombie startups, ghost ships set adrift.
Fellowship programs, equity-based pay and founder guilds could help keep new talent aboard and learning.
THE HORIZON
Taiwan’s semiconductor carriers remain the pride of its fleet, but for how long? Without scouts, escorts, harbors and crew, the island risks being stranded at the lower rungs of the AI value chain.
The AI Armada offers a mobile, living strategy: adaptive, global, and resilient. Taiwan’s future can’t be measured in wafers alone, but in the ability of its startups to sail, scale and lead across the world’s digital oceans.
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