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The Internet of Things

  • date:2022-07-21
Communications Industry

Source: Industrial Development Bureau, MOEA


I. Policy Initiatives

1. Digital Nation & Innovative Economic Development Program (DIGI+)

Taiwan launched the DIGI+: Digital Nation & Innovative Economic Development Program (2017-2025) at the end of 2016 to increase the penetration of digital services from 25.8% to 80%, and thereby realize Taiwan as a “smart nation.”

2. Communication Industry Development Project Office, IDB, MOEA

The office is for comprehensively developing the network communications industry, and guides industries to invest in the development of integrated solutions. It integrates resources and links startups and international platforms to develop innovation capabilities and talents, in hopes of enhancing the competitiveness of Taiwan's communications industry.


II. Overview of Industrial Development

1. Output Value

Holding the manufacturing systems of several communications products, Taiwan is one of the key players in the global communications industry. The output value of Taiwan's communication equipment industry (including network communication equipment and personal mobile devices) was NT$997.9 billion in 2019, dropping 1.8% from 2018. The continued expansion of demand from Internet of Things (IoT) and cloud applications, as well as the development of emerging technologies such as network virtualization, LPWAN, AI, 5G and Edge computing are expected to boost the demand for wired/wireless communication products. In 2020. Taiwan's communications industry can therefore expect to grow once again to NT$1016.9 billion for an annual growth rate of 1.9%.

2. Industrial Clusters

1Northern Taiwan

Generally speaking, Taiwan's communications industry clusters are located in the northern parts of Taiwan, including Greater Taipei, Taoyuan and Hsinchu, which include Neihu Technology Park, Hsinchu Science and technology Park, Tai Yuen Hi-Tech Industrial Park, and Guishan in Taoyuan. Taiwan's leading communications companies are Accton Technology, Sercomm, and Wistron NeWeb. Leading telecom operators are Chunghwa Telecom, Far Eastone, Taiwan Mobile and Asia Pacific Telecom.

2Central and Southern Taiwan

Communications companies in central Taiwan are mainly automobile communications electronics and consumer electronics manufacturers. Even though southern Taiwan is home to Kaohsiung Software Technological Park and Southern Taiwan Science Park, occupancy by communications companies are lower than northern Taiwan.


 III. Investment Opportunities

1. Leveraging Taiwanese Industry Clusters to Invest in Technological R&D and High-end Manufacturing

Taiwan's communications companies have both manufacturing and global logistics capabilities. Their strengths include networking IC, parts and components, touch panels, and system integration. The industrial chain is relatively complete. At present, several leading international communications companies, such as Qualcomm and Ericsson, have established offices or R&D and design centers in Taiwan, creating new business opportunities.

2. Taiwan as a Base for the Development of 5G Business Models and Innovative Applications

Taiwan already plays an important global role thanks to its edge in the development of key IC, modules, and terminal products. Taiwanese companies will have an opportunity to connect central office and terminal end, then gradually complete the industrial value chain as they integrate 5G, cloud computing, IoT, and AI technologies, thereby becoming system solution suppliers. In addition, local telecom operators are all actively building their own 5G testing regions to develop a new business model for 5G. The availability of open networks and communications infrastructure will hopefully encourage vendors to experiment with different solutions.


IV. Investment Incentive Measures

1. Tax incentives

(1) Taiwan’s profit-seeking enterprise income tax rate is 20%

(2) Up to 15% of the company’s R&D expenditures may be deducted from its profit-seeking enterprise income tax for current year.

(3) Royalty payments to foreign companies for imported new production technologies or products that use patents, copyrights, or other special rights owned by foreign companies is, with the approval of the Industrial Development Bureau, MOEA, exempt from the corporate income tax.

(4) Imported machinery which local manufacturers cannot produce are eligible for duty-free treatment.

2. Subsidies

(1) The Global R&D Innovation Partner Program

Some foreign companies have a high degree of complementarity with Taiwan's industries. To encourage them to engage in R&D and innovation activities in Taiwan, such companies, after gaining approval from the MOEA, will be eligible for subsidies of up to 50% of total R&D expenditures if they: a. have technologies that are not yet mature in Taiwan or overseas, and could create strategic products, services, or industries over the course of future industrial development; b. have potential to help Taiwan produce leading technologies or significantly enhance the competitiveness and increase the added value of important industries; or c. engage in key and common technology R&D, vertical or horizontal technology integration, and can create an industrial value chain.

(2) Integrated R&D Program

Companies, once approved by the MOEA, will be eligible for subsidies of no less than 40% but no more than 50% of total project funding if they: a. engage in key and common technology R&D, vertical or horizontal technology integration, and can create an industrial value chain; b. establish industry standards, protocols, or platforms; or c. establish applications, services, and innovative business and marketing models with technological content, and increase industry's added value.

(3) Taiwan Industry Innovation Platform Program

The MOEA Industrial Development Bureau and the Ministry of Science and Technology are jointly implementing the "Taiwan Industry Innovation Platform Program" to guide industries to develop towards greater value, and to encourage companies to enter high-end product application markets to increase industry's overall added value. For companies owning R&D teams in Taiwan, the program provides 40-50% of the funding required for theme-based R&D projects, and up to 40% of funding for R&D projects proposed by the companies themselves.

V. Major Foreign Investors in Taiwan

1. R&D Collaboration on Emerging Technologies and Applications

(1) US-based Cisco partnered with Taoyuan City Government to establish a "Cisco Innovation Center" for smart solutions in Taoyuan's Chingpu district. The innovation center will serve as a R&D hub for IoT in Taiwan.

(2) Qualcomm formally established a 5G test lab in Taiwan for 5G radio-frequency IC testing. Other labs including the 5G module test lab, biometric sensor excellence center and mmWave excellence center were also set up.

2. Cooperation on talent development

The Industrial Development Bureau(IDB), MOEA established a competition mechanism, leading international communications companies such as Google, Qualcomm, Microsoft, AWS, Sigfox and Cisco had also taken part as well. For example, Sigfox provided development modules for free to encourage contestants to develop innovative IoT applications using Sigfox technology. It also organized Hacking House to guide excellent startup teams in Taiwan to participate in its global IoT product development project.