Taiwan's Chip and AI Funding at Risk Amidst Spending Cuts

Taiwan's Ministry of Science and Technology (MOST) has warned that funding for crucial sectors like semiconductors, artificial intelligence (AI), and aerospace could be slashed by T$20 billion (approximately $609 million) next year, as reported by Reuters. This comes after Taiwan's opposition parties, holding a parliamentary majority, enacted legislation mandating spending reductions from the central government to local municipalities.

The MOST's warning follows a similar alert from the Ministry of Economic Affairs (MOEA) on Tuesday, expressing concern that the spending cuts could jeopardize crucial technology collaborations with leading tech companies such as Micron, AMD, and Nvidia. The MOEA also highlighted potential repercussions for Taiwan's international AI partnerships.

The MOEA's projections indicate a T$29.7 billion reduction in next year's economic spending, with technology projects bearing the brunt of the cuts at T$11.6 billion. Notably, Micron stands as Taiwan's largest foreign direct investor. All three companies – Micron, AMD, and Nvidia – have applied for technology collaboration projects with the Taiwanese government, relying in part on government funding support.

The opposition's move to redirect spending has drawn strong opposition from Taiwan's ruling Democratic Progressive Party (DPP) and triggered protests. The DPP argues that these spending cuts will negatively impact Taiwan's technological advancement and global competitiveness, particularly in vital sectors like semiconductors and AI.