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The Internet of Things

  • date:2023-01-07
The Internet of Things

The Internet of Things

Source: Industrial Development Bureau, MOEA


I. Policy Initiatives

1. “Asia Silicon Valley Development Plan”

Taiwan's government began implementing the “Asia Silicon Valley Development Plan” in 2016. The plan has two themes: "promoting IoT innovation and R&D" and "strengthening the innovative entrepreneurial ecosystem." The plan aims to integrated technology R&D capabilities, talents, capital, and markets worldwide to drive the comprehensive transformation and upgrade of Taiwan's industries through the IoT.

2. Specific Promotion Strategies

(1) Taiwan government created the “Major League IoT, ASVDP” for promoting cross-disciplinary cooperation and forming industry standards in 2016. The League has created Special Interest Groups (SIGs) in smart transportation, smart logistics, smart manufacturing, smart energy efficiency and environment monitoring, smart commerce, smart home, smart farming, smart healthcare, and IoT information security. It organizes quarterly conferences and actively promotes cross-disciplinary exchanges between the domestic industry, government, and academia on IoT applications.

(2) To effectively promote startups and the IoT industry, the government created a demonstration site in Taoyuan, planned the Asia Silicon Valley Innovation and R&D Center, promoted smart industrial parks, and established the "Hutoushan Innovation Hub". The hub will serve as a gateway to international innovation centers such as Silicon Valley.


II. Overview of Industrial Development

1. Output Value

The output value of Taiwan's IoT industry grew from NT$0.83 trillion in 2016 (accounts for 4.02% of the global output value) to NT$1.17 trillion in 2018, surpassing the NT$1 trillion mark for the first time and accounting for 4.24% of the global output value. It is expected to grow to NT$1.3 trillion in 2019 and account for 4.3% of the global output value.

2. Industrial Clusters

The IoT industry spans the IT manufacturing industry, equipment manufacturing industry, and software and information service industry, which involves multiple fields of technology, including computers, communications, network, computing, sensors, embedded systems, and microelectronics. Due to the extensive fields involved in the IoT industry, the industry has not formed a specific industrial cluster, but rather exists in the form of test sites developed based on local demand and industrial development.

Figure 2  IoT demonstration site in Taiwan


III. Investment Opportunities

1. Utilizing Taiwan's dominant industries to develop core applications in the IoT industry

Taiwan has a complete semiconductor supply chain, an abundance of engineering talent for R&D and design, and is close to emerging markets in Asia. System application/assembly companies in the ICT industry are recognized by international brands for their manufacturing ability. The companies have recently expanded beyond conventional 3C (computer, communications, consumer electronics) into vertical IoT applications and system integration solutions. Through investing in Taiwan, foreign companies are able to increase the depth of their partnership with Taiwan's semiconductor and ICT industries, implement high-end parts and components/software design and development technologies, and search for module, subsystem, and application developers to work with, then jointly develop targeted vertical IoT application markets.

2. Bolster incubation resources to strengthen innovation and application capacity

The Industrial Development Bureau of the Ministry of Economic Affairs set up incubation centers in Nangang in Taipei and Qianzhen in Kaohsiung to cultivate teams/companies that specialize in emerging applications in the semiconductor and smart IoT industries. The government used advertisement and promotion campaigns in Taiwan and abroad to attract startup companies/teams with potential to set up offices. It provides incubation resources including space, talents, funding, technical environment and structure, market, and finance/legal counseling necessary in all stages of the growth of companies from start-up, establishment, and expansion to maturity. It helps companies pass operation bottlenecks and strengthen innovative and entrepreneurial capacity. It also fosters cooperation between incubation companies and local operators. It directs the capacity of the incubation teams to power the upgrade and transformation of local industries.

3. Development of key sensor technologies for the IoT in niche markets

The IoT framework consists of a sensor layer, network layer, and application layer. Sensor technologies in the sensor layer play a crucial role, not only involving the integration of hardware sensor components/circuit design and integration, but also software technologies for integrating multiple sensor signals and special algorithms for integrating AI/edge computing. Foreign companies that invest in Taiwan can invest in optical/3D vision sensors, biomedical sensors, or gas sensors for environmental/food safety. They can partner with smart vehicle and smart manufacturing test sites in Taiwan to jointly develop key sensor technologies that meet demands particular to Taiwan/Asia’s market.

4. Expand business opportunities in innovative IoT applications to respond to the contactless economy

The COVID-19 epidemic has tremendous impact on the world. The "contactless economy" has emerged as a new trend as people seek to suppress the spread of the epidemic. The demand for working from home, online meetings, digital courses, telemedicine, video and audio entertainment streaming, and digital financial payments has increased dramatically. There is also potential for growth in the smart manufacturing, robotic warehousing, and service robot market. Foreign companies may invest in Taiwan or work with Taiwanese businesses in exploring business opportunities in the "contactless economy". They use Taiwan's ICT, machinery, and medical equipment industries and testing grounds to develop innovative IoT applications.

5. Reducing the risks and costs derived from changes in the global environment

Network information security and government control policy are important factors that will affect the development of the IoT industry at the place where the investment is made. Taiwan is deeply trusted by international corporations due to complete regulations that fully protecting their intellectual property rights and information security. Next, the Taiwanese government and companies are fully aware of trends in the global industry, and flexibly adjust their supply chains based on changes in the international economic and trade situation. Foreign companies that invest in Taiwan or partner with Taiwanese companies will be able to reduce the risks and costs brought by the U.S.-China trade and technology conflicts or global pandemics. 


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.

(4) Promotion Plan for Smart Commercial Services in the Asian Silicon Valley Project

Subsidies were provided to the retail industry and integrated service industry in 2020. For qualified applicants, the subsidies may not exceed 50% of the total budget of each proposal (includes subsidies and self-raised funds). Applicant may only file applications for projects within their own systems and the maximum subsidy is limited to NT$3 million. For "large companies supporting small companies" or "cross-industry alliances", the maximum subsidy is limited to NT$5 million. Furthermore, the self-raised funds portion may not be higher than the company's paid-in capital.


V. Major Foreign Investors in Taiwan

1. Development of smart applications

(1)Amazon Web Services (AWS) entered a partnership with MOEA for the establishment of the "AWS Joint Innovation Center, Startup Terrace". It also announced that the first AWS IoT Lab in Greater China will be established in Taipei.

(2) Microsoft teamed up with startups in Taiwan and its partners in the industry in the development of smart city applications, such as working with Taiwan’s Osense Technology, and Thailand’s BTS Group, to make stations a destination for tourists and citizens through precision positioning and AR technology.

2. Cooperation on testing facility

(1) Dassault Systèmes established an R&D center in Taiwan and formed an alliance with the Fair Friend Group to seize business opportunities of smart factories. It also signed a MOU with Taichung City Government to collaborate in projects relating to IoT, startup ecosystem, and innovation and R&D hubs.

(2) Cisco signed a MOU with Taoyuan City Government to utilize Cisco Technology in jointly promoting AI, IoT, and 5G demonstration applications and a verification platform.

(3) Siemens is working with Taichung City Government in building a site for smart manufacturing trial operations, and established a digital experience and R&D center. Siemens also established the IoT user organization MindSphere World to collaborate with experts from the industry, government, and academia in creating an ecosystem for the IoT industry.

3. Cooperation on talent development

Microsoft established the "AI R&D Center" in Taiwan and moved into "Startup Terrace", and has made plans to actively invest resources into Taiwan's excellent startup teams through Microsoft's startup accelerator. Google plans to activate the "Digital Talent Exploration Plan" in 2020 to provide free digital training services. It is expected to train 8,000 digital transformation talents.