AGP Executive Report

AI Chip Supply Chains: Taiwan’s substrate makers face a new challenge as Nvidia turns to Samsung, while Kinsus is emerging as a potential Nvidia supplier after TSMC shifted some collaboration its way. Taiwan’s Egis also partnered with France’s SiPearl on CPU chiplets, deepening cross-border work on AI and advanced semiconductors. Critical Materials: Taiwan is stepping up rare-earth production in response to China’s export controls, with ITRI aiming for a plant that could meet half of domestic demand by 2030. Factory Momentum, Higher Costs: Industrial production rose 19% in September and manufacturing sentiment reached a 55-month high, but Taipower expects fuel costs to climb NT$160 billion this year. The Taiwan dollar is down 3.29% against the U.S. dollar so far in 2026. Trade and Talent: Micron is recruiting in South Korea for its Taiwan fabs as the memory-chip race intensifies; its Taiwan workers have also challenged the company’s bonus arrangements. Taiwan is pursuing wider business ties, including a possible Perth trade office and an expanded technology partnership with France.

Growth Outlook: Taiwan is forecast to grow 10.7% in 2026, the world’s second-fastest rate, as demand for technology and AI lifts the economy. Critical Materials: The Industrial Technology Research Institute aims to produce 500 metric tons of rare-earth oxides annually by 2030—enough to meet half of domestic demand—as Taiwan seeks to reduce reliance on Chinese supply. TSMC is also exploring alternative factory equipment. Energy Costs: CPC and Formosa Petrochemical held fuel prices steady for a sixth week despite rising global oil prices and a weaker Taiwan dollar. Micron Pay: Micron Taiwan announced quarterly profit-sharing and structural wage increases after reaching an agreement with the union representing more than 10,000 Taichung workers. Competition: Taiwan’s Fair Trade Commission blocked Grab’s proposed US$600 million Foodpanda acquisition, citing competition concerns.**

Rare-Earth Supply: Taiwan’s ITRI plans a demonstration plant capable of producing 500 tonnes a year by 2030—about half the island’s demand—as China’s export controls spur efforts to secure supplies. TSMC is also exploring alternatives for rare-earth components in factory equipment. Industrial Momentum: September industrial production rose 19% year on year, extending its growth streak to 31 months, while manufacturing sentiment hit a 55-month high. Trusted Tech Links: Foreign Minister Lin Chia-lung called for Taiwan-Europe cooperation on AI and drone supply chains, including a proposed technology park in Poland. Labor Market: Atypical workers made up 6.82% of Taiwan’s workforce, the lowest share since 2013. Competition: Taiwan’s regulator blocked Grab’s proposed US$600 million Foodpanda acquisition, citing competition concerns.

Storm Disruption: Typhoon Champi killed one person and injured hundreds, while closures and flight cancellations disrupted business and travel across Taiwan. AI & Chips: TSMC’s pricing power is strengthening with AI demand, and it will pay non-managerial staff a NT$30,000 bonus despite canceling its Sports Day. Industry Momentum: Taiwan’s manufacturing sentiment reached a 55-month high; September industrial production rose 19% year over year, while export orders hit a monthly record. Supply Chain Resilience: ITRI plans a rare-earth plant to meet half of Taiwan’s demand by 2030. Taiwan is also seeking closer European cooperation on trusted AI and drone supply chains.

Typhoon Disruption: Champi killed one person and injured hundreds in Taiwan, while flight cancellations, power outages and business closures disrupted activity across the island. Rare-Earth Supply: ITRI is planning a demonstration plant capable of producing 500 metric tons a year—about half of Taiwan’s needs—by 2030, as export controls raise supply-chain concerns. TSMC is also seeking factory-equipment alternatives that reduce reliance on Chinese rare-earth components. Economic Momentum: September industrial production rose 19% for a 31st straight month, while manufacturers’ business sentiment reached a 54-month high. Micron Labor: Micron and its Taiwan union signed a deal, ending mediation after a dispute over profit-sharing.

Storm Disruption: Typhoon Champi forced Taiwan to suspend trading and shut schools and businesses, cancelling nearly 1,000 flights; one person died and hundreds were injured. Cybersecurity: Taiwan urged urgent patches for a PHP flaw affecting more than 28,000 public-facing websites; no local attacks had been reported, but officials warned compromised sites may show no signs. Semiconductors: TSMC is exploring equipment alternatives that avoid Chinese rare-earth components, while Micron workers in Taiwan staged a strike over profit-sharing. Economic Pulse: Industrial production rose for a 31st straight month, and manufacturers’ business sentiment reached a 54-month high as AI-linked demand supports growth. Business and Finance: Swiss bank UBP partnered with Taishin to expand private banking in Taiwan; regulators blocked Grab’s planned $600 million Foodpanda acquisition, citing competition concerns and ties to Uber.

Typhoon Disruption: Typhoon Champi brought Taiwan close to a standstill, killing one person and injuring 94. Authorities evacuated nearly 1,300 people, cancelled 931 flights and closed financial markets. Market Jolt: Asian shares slid as investors questioned the returns on massive AI spending; Taiwan’s market closure left local stocks out of Friday’s selloff. AI Supply Chain: Taiwan’s electronics output more than doubled in 2026, driven by AI demand, while PCB makers forecast US$35.7 billion in global production this year. Capacity, materials and equipment bottlenecks threaten to slow growth. Labor Tensions: Micron’s Taoyuan union staged a 24-hour warning strike, seeking quarterly bonuses tied to 15% of operating profit; the company reached a separate deal with its Taichung union. Business Deals: Taiwan’s Fair Trade Commission blocked Grab’s US$600 million Foodpanda acquisition, citing competition concerns linked to Uber’s stake in Grab. TSMC Momentum: TSMC reported record third-quarter results, with revenue up 50.9% as AI chip demand surged, while seeking alternatives to factory equipment containing Chinese rare-earth magnets.

Competition: Taiwan’s Fair Trade Commission blocked Grab’s US$600 million purchase of Foodpanda Taiwan, saying Grab’s 13.1% stake and board ties to Uber could weaken competition between the island’s two leading delivery platforms. Semiconductors: TSMC is asking suppliers for factory equipment that avoids China-dominated rare-earth magnets, seeking to reduce supply risks. It is also discussing SpaceX’s proposed Terafab, but says any fab it supports in Texas must be run by TSMC. Industry: Foxconn will buy a 50% stake in Mitsubishi Electric Mobility for ¥115 billion, combining automotive technology with Foxconn’s manufacturing capacity; the deal is expected to close in October 2027. Labor: Micron workers in Taoyuan began a one-day strike over profit sharing, while a separate Taichung union reached an agreement with the company. Construction: TSMC halted work at a Kaohsiung fab site after four workers died in a fall. Weather: Typhoon Champi prompted Taiwan to suspend stock trading and close schools, while disrupting flights and raising concerns about regional port delays.

Chip Labor: Micron workers in Taoyuan began a strike over profit-sharing, seeking a bigger share of AI-driven earnings. The dispute marks Taiwan’s first semiconductor-industry strike; talks with the company are continuing. AI Supply Chain: Nvidia lined up six partners to expand chip substrates, packaging, testing and optical-engine capacity, including Taiwan’s KYEC, SPIL and Unimicron. It committed a $1.1 billion capacity advance to KYEC. TSMC Safety: TSMC halted work at a Kaohsiung construction site after four workers died, disrupting a major fab project. Competition: Taiwan’s Fair Trade Commission blocked Grab’s proposed Foodpanda acquisition, stopping a deal that would have reshaped the local food-delivery market. Growth Outlook: CIER raised its 2026 GDP forecast to 12.16%, citing the AI-driven tech boom, while export orders hit a monthly record.

Competition: Taiwan’s Fair Trade Commission blocked Grab’s US$600 million purchase of Foodpanda’s local delivery business, saying the deal’s competition risks outweighed its benefits and proposed safeguards fell short. Chip Industry: Micron reached a deal with its Taichung union, but a Taoyuan union still plans a one-day strike on Oct. 22 over profit sharing; no production impact has been confirmed. Workplace Safety: TSMC halted construction at its Kaohsiung site after four workers died in a fall, raising fresh concerns over safety at a major 2nm project. Growth and Payments: AI demand is driving strong forecasts for Taiwan’s economy, with CIER projecting 12.16% growth this year. DBS PayLah! users can now pay at more than 250,000 Taiwan merchants via QR code.

Chip Industry: TSMC halted steel-structure work at construction sites across Taiwan after four workers died at its Kaohsiung factory project. The company is investigating with authorities and contractors. Labor: Micron’s Taoyuan union plans a one-day strike on Oct. 22, escalating a profit-sharing dispute as workers seek a permanent share of operating earnings. Investment: TSMC plans to make 3-nanometer chips at a second Japanese factory, with investment expected to exceed US$23 billion, extending its regional manufacturing footprint amid strong AI demand. Trade and Growth: Taiwan’s export orders grew 62.4%, while September exports surged more than 60% year on year, led by AI-related demand. A think tank raised its 2026 growth forecast to 12.16%, the highest in 39 years. Supply Chains: More than 200 Taiwanese auto suppliers are heading to a Las Vegas trade show as US buyers seek resilient, diversified sourcing.

AI Chip Demand: ByteDance, Alibaba and Tencent have ordered more than 3 million Nvidia RTX PRO 5500 cards, worth over US$35 billion, amid U.S. export limits. Nvidia warned it may supply only a fraction of the requested volume. Trade: Taiwan’s September exports set a monthly record, rising more than 60% year on year, while export-order growth eased to 62.4%. Workplace & Labor: Three workers died in an accident at a TSMC construction site in Kaohsiung, where work has been suspended pending an investigation. Micron’s Taoyuan union plans a one-day strike on Oct. 22, seeking a concrete profit-sharing plan as AI memory demand remains strong. Offshore Wind: Developer CIP called Taiwan’s latest auction rounds a failure; only about 2.39GW of nearly 5GW awarded in earlier rounds remains active, amid cost and local-content pressures. Business Travel: Starlux is adding flights to technology hubs including Phoenix, Prague and Ontario to meet rising semiconductor-related passenger and cargo demand.

Market Mood: Asian technology stocks slumped Tuesday as investors questioned AI spending and valuations. Taiwan’s Taiex edged higher, but TSMC shares fell as markets awaited major earnings reports. Chip Supply Chain: Micron workers in Taoyuan plan a strike Thursday amid a bonus dispute, raising labor tensions at a key AI-memory production hub. Export Controls: Taiwan is preparing tougher curbs on advanced chips and AI servers shipped to China; unauthorized exports could become a criminal offense. Business Investment: MiTAC Computing plans to invest NT$12.62 billion in Taiwan server manufacturing, while Foxconn agreed to buy half of Mitsubishi Electric’s mobility unit for ¥115 billion, expanding its EV ambitions. Economic Outlook: A Cathay Financial survey found improving confidence in Taiwan’s economy, stock market and wage prospects. The upbeat mood follows a sharp rise in the 2026 growth forecast, driven by AI demand and exports.

Markets: Taiwan shares fell on Monday as global worries about AI spending outweighed strong chip demand, while the Taiwan dollar also faced pressure. Chip Boom: TSMC posted record third-quarter profit, up 68.7% year on year, and lifted its outlook as AI demand outstrips supply; high-performance computing made up 68% of quarterly revenue. TrendForce expects AI server shipments to rise 32.2% this year. Growth Outlook: CIER forecasts Taiwan’s economy will grow 12.16% in 2026, its fastest expansion in 39 years, powered by technology exports. Corporate Deals: Foxconn agreed to buy half of Mitsubishi Electric Mobility for about US$727 million, joining forces to develop EV platforms for Japanese automakers and global markets. Factory Investment: MiTAC Computing plans to invest NT$12.62 billion in Taiwan server manufacturing, adding capacity as AI infrastructure demand surges. Labor: Micron workers in Taiwan have authorized a strike over bonuses; President Lai urged the company and union to negotiate as mediation continues.

Markets & Currency: Taiwan’s Taiex fell 1% on Monday as investors reassessed AI valuations. The Taiwan dollar suffered its steepest weekly decline in more than a year, prompting the central bank to signal it may intervene if volatility persists. Chip Supply Chain: TSMC is joining Samsung’s production of base dies for Nvidia’s next-generation memory chips, while AI-driven demand continues to reshape Taiwan’s semiconductor sector. Electric Vehicles: Foxconn and Mitsubishi Electric plan a 50-50 venture to build a global EV platform, combining Foxconn’s manufacturing scale with Mitsubishi’s technology. Corporate Strategy: Accenture is reviewing a possible sale of its Greater China business, which includes Taiwan, for up to US$1.5 billion; a deal is not assured. Regional Policy: Finance Minister Chuang Tsui-yun is leading Taiwan’s delegation to the APEC finance ministers’ meeting in Hong Kong, where officials will discuss economic prospects and Taiwan’s plans to encourage private investment in digital infrastructure.

Chipmaking: TSMC’s AI-fueled record quarter is rippling through the supply chain: Samsung, SK Hynix and Micron are reportedly set to use TSMC’s 3-nanometre process for base dies in Nvidia’s custom memory chips. TSMC says demand still exceeds supply, but a global AI-stock selloff is raising concerns that high borrowing costs could curb investment. Corporate Moves: Accenture is weighing a sale of its China operations for up to US$1.5 billion. The business includes Taiwan and Hong Kong, and a deal is not confirmed. Energy Costs: CPC and Formosa Petrochemical kept fuel prices unchanged for a fifth straight week, cushioning consumers as oil remains elevated.