The semiconductor industry has made great contributions to Taiwan's economic growth in the 1990s, but growth in this industry is becoming flat. It is expected that the next high-production product will come from the TFT–LCD industry, as the industry is considered the next star industry in Taiwan, after the semiconductor industry.

Since 2002, the Taiwan government has promoted Taiwan as the world's largest TFT-LCD industry supplier, having launched "The Challenge 2008: National Development Plan" and pushed the so-called "Two Trillion, Twin Star Development Program."

Considering that the TFT–LCD industry is highly capital-intensive and requires large amounts of capital to purchase manufacturing equipment, the Ministry of Economic Affairs (MOEA) has been promoting measures to help Taiwan develop its optoelectronics material industry.

Regarding Taiwan's TFT–LCD industry development, Taiwan has been manufacturing TN and STN LCDs since 1990. Although the global TFT-LCD industry had an early beginning, it didn't take off in Taiwan until after the 1997 Asian financial crisis. Taiwan began its aggressive output in the TFT–LCD industry in 1998 with abundant capital, great vision, and a comprehensive industrial chain that included notebook PCs and LCD monitors. Over decades of effort, Taiwan has performed relatively well in its production of TFT-LCDs. In 2010, Taiwan held 41.7% of the global TFT-LCD market, leapfrogging Japan (9.7%) and placing it second in the world behind South Korea (42.2%).

Five of the world's largest producers of TFT-flat screens are Taiwan-based. Displays, LEDs, couplers, laser pick-ups and transmitters, infrared devices, and image sensors meet the needs for mobile phones, billboards, automobiles, healthcare devices, and television sets. 

The major TFT–LCD suppliers in Taiwan are AUO, Innolux, CPT, and Hannstar.