Technology has been Taiwan’s pillar of success since it became a global powerhouse for computer components and semiconductors in the 1980s. However, while technology has changed dramatically over time, it seems that Taiwan’s tech industry has not. Taiwan boasts a wealth of high-tech companies, but most them are merely mass-producers of computer components, such as Gigabyte and Realtek, or PCs, like ASUS and Acer, which have since lost their low-cost advantage to Mainland China.

Thus, the natural next-step for Taiwan’s tech industry would be to advance to innovative technology like that of the Silicon Valley, yet the island appears to be still stuck in the past. While larger firms like ASUS and HTC have high market shares in the PC and smartphone market, most of their products are merely alternatives to existing products on the market, without many breakthrough innovations seen in other brands like LG or Samsung.  

With Taiwan’s economy continuously stagnating, the government has therefore launched a bold new initiative to revive Taiwan’s faltering tech sector: creating a Silicon Valley of the East.

One of the Tsai government’s main economic policies during the elections, the Executive Yuan plans to allocate $11.2 billion NT dollars ($358 million US dollars) from their budget next year to begin constructing this so-called “Asian Silicon Valley” project in the city of Taoyuan, not far from the capital of Taipei, with hopes of maturation by 2023.

The government’s main goal is to restructure Taiwan’s main industries in order to catch-up with the rest of the world, as well as bringing more exposure to the country for increased foreign investment. In terms of the tech industry, the country will start by improving its Internet infrastructure, mobile broadband services, as well as creating a new zone for testing IoT (Internet of Things) tech and new institutions to culminate young talents, such as industry collaborations with national universities, with hopes of spurring a culture of entrepreneurship in the industry.

It also hopes to bring in talents from abroad with this development, as well as retain talent from within the island itself. The loss of young Taiwanese talent has been one of the country’s greatest concerns, as talented youths in Taiwan prefer moving abroad for better job opportunities. In fact, some of the world’s most successful tech companies have been founded or co-founded by Taiwanese people who left for the States: Yahoo, Youtube, Vizio, SanDisk, Kingston, Garmin, NVIDIA… the list goes on and on.

The government also hopes that the creation of the country’s own Silicon Valley can inspire Taiwanese youths to create their own start-ups in their home country, something Taiwan seriously lacks when compared to Japan, South Korea, or even Mainland China. This is mainly because, for the most part, Taiwanese people then to be a little more conservative in their upbringing, afraid of making mistakes and thus refraining them from trying new things. Tsai’s government hopes that with a shining example of the creative process, namely Taiwan’s own Silicon Valley, it could begin to change the Taiwanese mentality and inspire a new wave of innovative thinking.

According to Premier Lin Chuan, the A msian Silicon Valley project is bound to add over a trillion NT dollars ($32 billion US dollars) to Taiwan’s GDP, and with Taiwan’s exports continuously reporting negative for the past 17 months, this economic rejuvenation sounds ideal for the country. Yet some believe it may be a little too ideal to be true.

Many experts believe that the plan is bound to fail in its current state, saying that the government should not simply try to direct this new initiative by itself through budget allocation, but should rather support the country’s major tech companies through subsidies, having them lead the e3

Nevertheless, this is still an exciting proposal for the now stagnating economy of Taiwan, as it could advance the country into the next stage of innovative economic development. On paper, Taiwan is a country with enough IT skills and potential to become the Silicon Valley of the East, and should it succeed in reality, Taiwan may just be able to bring its economy back on track and become a new land of innovation.