Taiwan Semiconductor Manufacturing Company has notified Chinese chip design companies that it will suspend production of their most advanced artificial intelligence chips, as Washington continues to impede Beijing’s AI ambitions.
TSMC, the world’s largest contract chipmaker, told Chinese customers it would no longer manufacture AI chips at advanced process nodes of 7 nanometers or smaller as of this coming Monday, three people familiar with the matter said.
Two of the people said any future supplies of such semiconductors by TSMC to Chinese customers would be subject to an approval process likely to involve Washington.
Already positioned at the center of the global semiconductor industry, Taiwan now wants to make itself a hub for innovation in advanced artificial intelligence. The island nation’s new leadership, in place since May 2024, has taken a number of steps to help the country take better advantage of the AI that its chips enable.
The fruits of the effort are starting to show. Electronics manufacturing giant Foxconn is building the country’s biggest AI supercomputer ever, using Nvidia’s latest chips. But Taiwan’s AI effort hinges on it finding enough skilled workers to do the job.
The island nation is confronting some pressing challenges—a declining birth rate of approximately 5.81 births per 1,000 people, an aging population, and rising geopolitical tensions in the Indo-Pacific. So leveraging AI for economic growth and sustainability has become increasingly vital, according to vice president Bi-khim Hsiao.
“AI can help us develop new solutions more quickly and efficiently, becoming another key engine for economic growth,” Hsiao said at an AI and sustainability forum in July.
President Lai Ching-te’s government is rolling out new measures designed to build robust infrastructure, promote AI adoption across various sectors, invest in data centers, establish supercomputers, and advance Taiwan’s control over its own AI systems.
It’s part of a strategic plan Lai’s Cabinet approved to strengthen its “Five Trusted Industry Sectors”: semiconductors, artificial intelligence (AI), defense, security, and next-generation communications. In the AI sector, Taiwan aims to leverage its hardware industry to drive growth in high-value AI applications‑targeting an output of over NT$1 trillion (US$31 billion) by 2026, from the current approximately NT$800 billion dollars, and train 200,000 AI and related professionals over the next four years.
To support these ambitions, the country will enhance the National Development Fund’s investments in AI-related companies and collaborate with the Ministry of Digital Affairs on a NT$10 billion initiative focused on the AI industry.
Furthermore, Taiwan is bolstering its technological infrastructure by improving computing power and developing energy-efficient data centers. Foxconn’s future supercomputer is an example. The system, which should be capable of 90 billion operations per second (90 exaflops), will be powered by 6,902 of Nvidia’s new GB200 (Grace-Blackwell) CPUs and GPUs.
Meanwhile, the government is also actively pursuing international partnerships while inviting U.S. AI startups to set up operations in Taiwan.
Workforce Issues
Taiwan’s small, 23.4 million population, its aging demographic, and its low birth rate make achieving its AI goals difficult. In a Cabinet meeting last month, Premier Cho Jung-tai underscored the necessity cultivating domestic expertise while attracting international professionals.
Although not exclusive to AI workers, Taiwan’s National Development Council (NDC) outlined a plan to educate and train 450,000 skilled professionals by 2028. The initiative also seeks to attract 120,000 foreign experts and 80,000 foreign technicians to fill a gap 200,000-person gap projected for Taiwan’s workforce by that date.
“This will ensure a sufficient supply of talent needed for the next phase of national development and build Taiwan’s competitive advantage,” Cabinet spokesperson Michelle Lee told reporters.
But the domestic workforce likely won’t be enough, and Taiwan is competing with many other nations for AI talent. “To bring in international talents, Taiwan really needs to highlight its incentives, since there’s a huge global demand for top-tier AI professionals,” says Ming-Shun Tsai, Provost of Taiwan AIA.
“In semiconductor manufacturing, machine learning and deep learning are increasingly being used to speed up product development and improve yield rates. This trend is growing fast.” —anonymous semiconductor manager
The government shares this view. Last month, NDC Deputy Minister Kao Shien-quey announced plans to enhance the Taiwan Gold Card program by introducing what it’s calling ‘Global Elite’ cards. The employment gold card currently serves as an open work permit, allowing foreign professionals with monthly salary exceeding NT$160,000 (about US $4,956, or $59,472 per year) to work in Taiwan for up to three years. The Global Elite card is targeted toward top-tier professionals who will work for local companies that offer annual salaries surpassing NT$6 million (around US $188,306). Recipients will be eligible for permanent residency after just one year of employment and will gain access to social benefits, including long-term care and disability services for their families. Additionally, their spouses will qualify for work permits.
Naturally, NDC views international students at Taiwanese universities as a vital source of future talent. Earlier this year, a new program was launched to attract students from nearby ASEAN countries, including Vietnam, Indonesia, and the Philippines, with a focus on AI, semiconductors, and other fields. Participants will receive a full tuition and fee waiver for up to two years, along with a monthly stipend of at least NT$10,000 paid by local companies. In return, graduates must work in Taiwan for at least two years after finishing their studies.
AI Industry Heads South
The AI industry is starting to cluster in southern Taiwan. The Foxconn AI supercomputer is to be constructed in Kaohsiung, and in August, Nvidia-rival Advanced Micro Devices, Inc. (AMD) announced plans to establish R&D hubs there and in Tainan, both of which host science parks.
“With major players like TSMC and global tech giant Nvidia setting up operations in Kaohsiung, it’s essential for the government to invest enough resources in universities in southern Taiwan. This will help us nurture the talents that’s urgently needed in the island’s key industries,” says Yue-Min Wan, a professor of electronics engineering at I-Shou University in southern Kaohsiung City.
TSMC itself, which has advanced fabs in the Tainan area, is in need of more AI talent. “In semiconductor manufacturing, machine learning and deep learning are increasingly being used to speed up product development and improve yield rates. This trend is growing fast,” says a senior manager in Taiwan’s semiconductor industry who did not want to be named.
The manager notes that companies are increasingly investing in AI training programs and service subscriptions to upskill their workforce. This has led to a rising demand for experts capable of integrating AI with environmental and sustainability initiatives, in an effort to drive both risk management and innovation, he says.
A maze of brackish and freshwater ponds covers Taiwan’s coastal plain, supporting aquaculture operations that produce roughly NT $30 billion (US $920 million) worth of seafood every year. Taiwan’s government is hoping that the more than 400 square kilometers of fishponds can simultaneously produce a second harvest: solar power.
What is aquavoltaics?
That’s the impetus behind the new 42.9-megawatt aquavoltaics facility in the southern city of Tainan. To build it, Taipei-based Hongde Renewable Energy bought 57.6 hectares of abandoned land in Tainan’s fishpond-rich Qigu district, created earthen berms to delineate the two dozen ponds, and installed solar panels along the berms and over six reservoir ponds.
Tony Chang, general manager of the Hongde subsidiary Star Aquaculture, says 18 of the ponds are stocked with mullet (prized for their roe) and shrimp, while milkfish help clean the water in the reservoir ponds. In 2023, the first full year of operation, Chang says his team harvested over 100,000 kilograms of seafood. This August, they began stocking a cavernous indoor facility, also festooned with photovoltaics, to cultivate white-legged shrimp.
A number of other countries have been experimenting with aquavoltaics, including China, Chile, Bangladesh, and Norway, extending the concept to large solar arrays floating on rivers and bays. But nowhere else is the pairing of aquaculture and solar power seen as so crucial to the economy. Taiwan is striving to massively expand renewable generation to sustain its semiconductor fabs, and solar is expected to play a large role. But on this densely populated island—slightly larger than Maryland, smaller than the Netherlands—there’s not a lot of open space to install solar panels. The fishponds are hard to ignore. By the end of 2025, the government is looking to install 4.4 gigawatts of aquavoltaics to help meet its goal of 20 GW of solar generation.
Is Taiwan’s aquavoltaics plan unrealistic?
Meanwhile, though, solar developers are struggling to deliver on Taiwan’s ambitious goals, even as some projections suggest Taiwan will need over eight times more solar by 2050. And aquavoltaics in particular have come under scrutiny from environmental groups. In 2020, for example, reporter Cai Jiashan visited 100 solar plants built on agricultural land, including fishponds, and found dozens of cases where solar developers built more solar capacity than the law intended, or secured permits based on promises of continued farming that weren’t kept.
Star Aquaculture grows milkfish to help clean water for its breeding ponds.HDRenewables
On 7 July 2020, Taiwan’s Ministry of Agriculture responded by restricting solar development on farmland, in what the solar industry called the “Double-Seven Incident.” Many aquavoltaic projects were canceled while others were delayed. The latter included a 10-MW facility in Tainan that Google had announced to great fanfare in 2019 as its first renewable-energy investment in Asia, to supply power for the company’s Taiwan data centers. The array finally started up in 2023, three years behind schedule.
Critics of Taiwan’s renewed aquavoltaic plans thus see the government’s goal as unrealistic. Yuping Chen, executive director of the Taiwan Environment and Planning Association, a Taipei-based nonprofit dedicated to resolving conflicts between solar energy and agriculture, says of aquavoltaics, “It is claimed to be crucial by the government, but it’s impossible to realize.”
How aquavoltaics could revive fishing, boost revenue
Solar developers and government officials who endorse aquavoltaics argue that such projects could revive the island’s traditional fishing community. Taiwan’s fishing villages are aging and shrinking as younger people take city jobs. Climate change has also taken a toll. Severe storms damage fishpond embankments, while extreme heat and rainfall stress the fish.
4.4
Gigawatts of aquavoltaics that Taiwan wants to install by the end of 2025
Solar development could help reverse these trends. Several recent studies examiningfishpondsin Taiwan found that adding solar improves profitability, providing an opportunity to reinvigorate communities if agrivoltaic investors share their returns. Alan Wu, deputy director of the Green Energy Initiative at Taiwan’s Industrial Technology Research Institute, says the Hsinchu-based lab has opened a research station in Tainan to connect solar and aquaculture firms. ITRI is helping aquavoltaics facilities boost their revenues by figuring out how they can raise “species of high economic value that are normally more difficult to raise,” Wu says.
Such high-value products include the 27,000 pieces of sun-dried mullet roe that Hongde Renewable Energy’s Tainan site produced last year. The new indoor facility, meanwhile, should boost yields of the relatively pricey whiteleg shrimp. Chang expects the indoor harvests to fetch $500,000 to $600,000 annually, compared to $800,000 to $900,000 from the larger outdoor ponds.
The solar roof over the 100,000-liter indoor growth tanks protects the 2.7 million shrimp against weather and bird droppings. Chang says a patent-pending drain mechanically removes waste from each tank, and also sucks out the shrimp when they’re ready for harvest.
Land that Star Aquaculture set aside for wildlife now attracts endangered birds like the black-faced spoonbill [left] and the oriental stork [right].iStock (2)
The company has also set aside 9 percent of the site for wildlife, in response to concerns from conservationists. “Egrets, endangered oriental storks, and black-faced spoonbills continue to use the site,” Chang says. “If it was all covered with PV, it could impact their habitat.”
Such measures may not satisfy environmentalists, though. In a review published last month, researchers at Fudan University in Shanghai and two Chinese power firms concluded that China’s floating aquavoltaic installations—some of which already span 5 square kilometers—will “inevitably” alter the marine environment.
Aquavoltaic facilities that are entirely indoors may be an even harder sell as they scale up. Toshiba is backing such a plant in Tainan, to generate 120 MW for an unspecified “semiconductor manufacturer,” with plans for a 360-MW expansion. The resulting buildings could exclude wildlife from 5 square kilometers of habitat. Indoor projects could compensate by protecting land elsewhere. But, as Chen of the Taiwan Environment and Planning Association notes, developers of such sites may not take such measures unless they’re required by law to do so.
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