AGP Executive Report

Taiwan-India Business Ties: Taiwan’s SME and Startup Administration and India’s MSME ministry held a Taiwan-India SME Cooperation Forum in Taipei, with matchmaking for 100+ Taiwan and Indian firms focused on AI applications and smart manufacturing. Semiconductor Pricing Pressure: Samsung raised prices for advanced foundry services—up to 15% for 4nm orders—citing tighter capacity as AI demand grows, with Taiwanese customers seeing smaller but still meaningful increases. Taiwan Mobility Perk: Taipei Metro’s Red Line extension (Guangci/Fengtian Temple to Xiangshan) will be free Aug. 30–Sept. 28, with fare exclusions and a capsule toy draw to mark the opening. Defense Budget Watch: Taiwan is set to approve a record NT$1.1225tn defense budget for next year, as drone funding and defense autonomy concerns remain in focus. AI in Healthcare: Acer Medical is seeking Philippines approval for AI tools to screen patients, aiming to ease local doctor shortages and expand via distributors. Markets & Rates: Asian stocks were mixed to downbeat as investors weighed US Treasury yield volatility and oil-price risks tied to the Strait of Hormuz deadlock.

AI Chips & Memory Race: Waymo says it’s now producing a custom AI chip for its robotaxis at TSMC’s 5nm, aiming to boost “reflexes” and navigation while reducing reliance on Nvidia and other third-party suppliers. Semiconductor Capex: Micron will pour $10B into Micron Research Labs in Boise over the next decade, targeting next-gen memory, compute architectures, packaging and future manufacturing—an explicit response to AI infrastructure bottlenecks. Foundry Pricing Pressure: Samsung raised advanced foundry prices by up to 15% for new orders amid tight AI chip capacity, with China customers reportedly accepting the steepest hikes. Taiwan Trade Momentum: Taiwan’s July export orders jumped 61.9% year-on-year to a monthly record $97.94B, led by strong AI-related demand for ICT and electronics. Local Market Signals: A Taiwan poll found 70.5% view Chinese coast guard patrols east of Taiwan as “ill will,” while 76.4% support tougher penalties for overseas violent crimes in Taiwan. Defense & Industry: The US Air Force awarded StandardAero a $343M depot-level services deal for Rolls-Royce T56 engines used on C-130s, covering work for aircraft including Taiwan’s foreign military sales partners. Regional Finance Watch: India’s SEBI is set to overhaul trading and derivatives rules to curb foreign outflows and support market participation.

Taiwan-US Defense Tech: Taiwan is moving ahead with a deal to develop AI-enabled autonomous underwater vehicles with U.S. firm Vatn Systems via NCSIST, aiming to boost maritime reconnaissance and “asymmetric warfare” resilience. Offshore Wind Finance: Ørsted filed early environmental paperwork for the up-to-2GW Dadu II offshore wind project near Changhua, adding to its broader Taiwan pipeline and reinforcing long-tenor offtake demand from TSMC. Trade & Industry: South Korea’s trade watchdog is set to recommend antidumping duties on Chinese and Taiwanese solid sodium hydroxide (caustic soda), while it also probes dumping of flat photographic plates. Local Economy & Infrastructure: Taipei’s MRT Red Line will extend with a new Guangci/Fengtian Temple station opening Aug. 30, improving access to nearby schools and a social housing area. Regional Business Signals: Malaysia reported a record RM364.74bn trade surplus in July, with exports rising 38% and shipments to Taiwan up 8.2%, highlighting continued semiconductor-linked integration. Public Policy & Demographics: Taiwan’s pension strain and aging challenge remain in focus, alongside new discussion of cash handouts tied to AI growth.

AI & Semiconductors: Samsung is reportedly raising advanced foundry prices by up to 15% as AI demand keeps its 4nm lines fully booked, with Chinese customers accepting the biggest hikes; the move lands as TSMC hits capacity and the broader chip selloff pressures Asia markets. Advanced Packaging Demand: V5 Technologies says AI-driven advanced packaging inspection demand should accelerate this quarter and next, tied to CoWoS yield needs. Market Signals: SK Hynix announced South Korea’s biggest-ever buyback to stem a prolonged stock rout, underscoring how fast sentiment can detach from fundamentals. Cyber & Security: Taiwan says it was hit by abnormal AI-assisted cyberattacks using autonomous agents targeting government systems, raising alarms for financial and critical infrastructure resilience. Energy Policy: A Taiwan trade group argues the country needs both nuclear and renewables to keep power stable for AI-driven industrial growth. Inclusive Finance: HSBC Taiwan joins the Hidden Disabilities Sunflower program, rolling out support wristbands across all branches. Food & Trade: Taiwan’s tainted cooking oil scandal continues with indictments of firms and executives, while Taiwan’s food industry looks to Singapore and Malaysia for new export growth. Business Expansion: Tim Ho Wan moves toward full control of its North America franchise platform as it buys out a partner stake.

AI Cash-Back Push: Taiwan plans to hand every resident NT$10,000 (about 450,000 won) next year, as the government tries to spread AI-driven growth beyond tech winners. Semiconductor Supply Chain: WEISUN Industrial added a dedicated 310mm chamber configuration for its AQWOL-5S smart clean room and inert gas oven, targeting FOPLP lines where cure/anneal warpage can make or break yields. AI Chip Funding: Etched raised $700M at a $21B valuation, led by Jane Street, as it starts shipping inference hardware and moves from development into customer deployments. Market Mood: Asian tech stocks slid again as bond yields jumped and oil prices rose amid uncertainty over the Strait of Hormuz; Taiwan’s Taiex also fell. Regional Finance: Franklin Templeton named Rene Buehlmann Asia-Pacific chief, signaling continued push into Taiwan and broader Asia wealth markets. Cross-Strait/Defense Context: Taiwan staged Han Kuang drills using older Patton-derived Brave Tiger tanks, underscoring how legacy hardware still supports deterrence. Business Diplomacy: Taiwan pledged grant funding to help capitalize St. Vincent and the Grenadines’ national development bank and expand social programmes, as Taipei courts new investment links. Cyber & AI Risk: Coverage highlights how AI-driven cyberattacks are emerging as a real operational threat for Taiwan’s government and banks.

AI-Era Cash Handouts: Taiwan plans to pay every resident NT$10,000 (about US$314) as an “AI dividend,” with KMT urging the government to double it to NT$20,000, arguing the fiscal capacity is there as growth hits a 39-year high. Semiconductor Outbound Investment: Taiwan’s outbound investment approvals jumped 208% in Jan–July, driven largely by TSMC’s big overseas capex plans, while inbound FDI also rose 78%. Food Safety & Legal Fallout: Prosecutors indicted 4 firms and 15 people over tainted cooking oil linked to excessive benzo(a)pyrene, with thousands of businesses affected and charges including food safety violations, forgery and fraud. Banking Earnings Momentum: CTBC Financial said earnings momentum should stay strong, citing growth across banking, insurance, overseas operations and capital markets. Agriculture Branding Push: Taiwan’s MOA rolled out a “Taiwan Peanut” label and elemental analysis to distinguish local peanuts from imports ahead of tariff-free US peanut plans. Defense-Resilience Drill: Taiwan simulated civilian impacts of a possible China attack by deliberately slowing mobile internet during military exercises, signaling a shift toward whole-of-society preparedness. Cybersecurity Warning: New reporting highlights how AI is accelerating vulnerability discovery and exploitation, stressing the limits of traditional patching. Shipping Costs: Maersk raised peak season container surcharges for routes including Taiwan, effective late August/early September.

Cross-Strait Security & Tech: A Brookings Taipei briefing highlights how Taiwan’s security and semiconductor innovation are tightly linked, with leaders and industry warning that disruption would ripple through the global economy. Defense Spending: Taiwan is set to propose a record 2027 defense budget as PLA activity around the island continues to draw attention. Trade War Pressure: The Trump administration’s “Great Transshipment Scam” push flags more than 40 countries, including Taiwan, as potential tariff-evasion conduits—raising compliance and supply-chain risk for regional exporters. AI & Cyber Risk: Reports say China-linked hackers used AI tools for an autonomous cyberattack on Taiwan government systems, underscoring growing cyberwarfare threats. Regional Finance: Singapore’s UOB appointed Tan Choon Hin as head of ASEAN and Greater China, aiming to capture cross-border growth and advise FDI expansion plans. Industrial Push: India’s YEIDA approved a Taiwan City and pharma cluster near Jewar-Noida Airport, while Illinois’ Illinois Quantum and Microelectronics Park is moving ahead with a South Chicago quantum computing campus. Macro Markets: Bond yields jumped as a U.S.-Iran truce expired, with oil extending gains and stocks including Taiwan turning cautious.

Taiwan Cash Handout Push: President Lai says the 2027 central government budget will include a universal NT$10,000 cash payment, framing it as an “AI dividend” funded by stronger revenue and “no new borrowing,” while the KMT calls it a double standard ahead of local elections. US Tariff Shock for Drones: The White House announced new unmanned aircraft tariffs, with duties up to 100% on selected drones, docking stations and critical components, and lower rates for qualifying products from allied markets including Taiwan—raising new sourcing and compliance pressure for the supply chain. AI Data & Election Warfare: The DPP alleges Beijing is using AI-driven disinformation to interfere in Taiwan’s elections, adding to the broader security and cyber risk backdrop. Optics Supply Tightens: Indium phosphide substrate and epitaxial wafer shortages are driving record price hikes, lifting optics and photonics stocks tied to the Taiwan supply chain. Market Mood: Global equities were mixed as Hormuz-related oil risks and lingering rate worries offset hopes the Fed won’t tighten further; Taiwan’s Taiex edged up slightly. Semiconductor Demand Signals: Unichip posted a sharp July sales surge on AI-related orders, while investors also tracked broader AI/semis momentum. Cross-Strait Human Interest: A photo-sharing encounter in China reportedly reunited long-lost cross-strait relatives, underscoring how business and tech platforms can still connect families.

US-Taiwan Trade Momentum: AmCham’s Doorknock trip says Washington backs Taiwan, but wants “tangible deliverables” after the ART deal, pushing for more investment, stronger semiconductor/AI ecosystems, energy security and an end to double taxation. Taiwan-US Security & Deterrence: Taiwan reported PLA aircraft and PLAN vessels operating around the island, underscoring ongoing cross-strait pressure as drills and cyber threats remain in focus. Semiconductor Tech Push: Taiwan researchers and TSMC-backed work highlight a 0.42-nanometer interface breakthrough aimed at moving transistors beyond silicon—another sign of the R&D race behind AI demand. AI & Cyber Risk: Taiwan says AI-assisted autonomous attacks targeted government systems, adding urgency for banks and public services to harden defenses. Regional Connectivity: Australia says all Pacific Islands Forum members are now connected to global undersea cable networks, with Taiwan included in delivery partnerships—boosting trade and digital access. Supply Chain Recognition: Dimerco chairwoman Catherine Chien won a 2026 Women in Supply Chain Trailblazer award, spotlighting leadership in logistics networks. Market Watch: Singapore’s non-oil exports rose 24.2% in July on strong AI-related electronics demand, though forecasts were missed. Policy Shock for Drones: Trump’s new drone tariffs could reshape Taiwan’s drone exports and push buyers toward “non-red” supply chains.

AI & Cybersecurity: Taiwan says it was hit by “abnormal” AI-assisted cyberattacks, with reports describing autonomous AI agents breaching government systems—raising new concerns for digital defenses. Defense & Cross-strait Risk: Taiwan completed major military exercises as fears of a China invasion grow, while China’s “salami-slicing” tactics and heightened PLA activity keep the security backdrop tense. Semiconductors & Packaging: TSMC signaled it’s open to customers shifting away from CoWoS constraints, suggesting advanced packaging is becoming less of a closed moat even as AI demand tightens capacity. Tech Business: Apple is reportedly skipping the standard iPhone 18 launch, with Pro and “iPhone Ultra” expected first—potentially reshaping Taiwan-linked supply plans. Economy & Markets: Taiwan’s average annual income hit a record NT$763,000 in 2025, and emerging-market assets rose as investors bet on softer US rates—supporting risk appetite. Education & Talent: Taiwan’s scholarship and internship push for Indian students continues under the Taiwan Experience Education Programme, targeting AI, semiconductors and robotics partnerships. Infrastructure & Mobility: Taiwan welcomed Japan-built N700ST Shinkansen trainsets, while Danjiang Bridge opens to ease traffic and connect communities across the Tamsui River.

AI Boom Lifts Taiwan Outlook: Taiwan’s statistics office raised its 2026 GDP growth forecast to 11.05%, a 39-year high, driven by global AI demand and stronger exports (goods and services seen up about 21%) plus higher private investment. Budget Deadlock Ends: Taiwan’s legislature finally approved the 2026 central government budget after a record 266-day delay, cutting about US$93B total spending and trimming key allowances while still funding priorities like drone development. Windows License Costs Hit PC Prices: Microsoft reportedly increased Windows OEM licensing fees by 7%–10% for some PC makers, adding to already strained supply chains and potentially pushing laptop and desktop prices higher. Defense Procurement Under Pressure: Taiwan’s counter-drone fixed-site program faces audit scrutiny over gaps against newer Chinese drone frequencies and limited coverage of BeiDou-3, with delays and component shortages blamed. China Military Activity Near Taiwan: Taiwan detected 11 PLA aircraft sorties and 8 PLAN vessels around the island early Sunday, with most crossing the median line into the ADIZ. Transport & Industry: Taiwan High Speed Rail welcomed Japan’s new N700ST trainsets at Kaohsiung Port, with commercial service targeted for July 2027.

Taiwan’s AI-led growth debate: Taiwan’s 2026 GDP growth forecasts have jumped to around 10%—but many ordinary people say they’re not feeling it yet, even as chip and server demand tied to AI keeps pushing activity. TSMC in focus: Investors are weighing whether TSMC’s latest guidance and AI-driven sales momentum are already “priced for perfection,” with the company also signaling big capex plans. Semiconductor supply chain pressure: South Korea’s July data shows memory exports surging while logic chips slip—an AI buying pattern that underscores the industry’s shift toward bandwidth-hungry memory. Open compute push for faster AI networking: An OCP coalition published a 300-page blueprint to speed adoption of co-packaged optics, targeting Q4 specs. Local tech security: Taiwan prosecutors indicted a Nanya engineer accused of trying to steal DRAM process know-how using a hidden 360-degree camera. Transport & infrastructure: Taiwan High Speed Rail will review fares after new trains start in July 2027, potentially ending a 20-year freeze. Energy costs watch: State oil supplier CPC kept gasoline and diesel prices steady next week despite higher crude, absorbing losses as the Iran situation drags on. Global trade risk: The White House alleges China uses a “shadow transshipment network” via dozens of countries, including India, to dodge US tariffs—an issue that could ripple through regional supply chains. Regional geopolitics: US carrier redeployments tied to the Iran fight are raising questions about deterrence in the western Pacific as China shows more assertiveness.

China-Tariff Evasion Crackdown: A new White House report names Taiwan among countries tied to a China-linked tariff-evasion network, with Taiwan’s finance ministry saying it’s tightening rules for exporters. Crypto Compliance Push: Taiwan’s Cabinet approved amendments to the Anti-Money Laundering Act to criminalize unauthorized digital-asset services and stablecoin issuance, with heavy penalties for money-laundering cases. Market Flows: MSCI raised Taiwan’s weighting in key indexes, lifting emerging-markets exposure to 26.85% and expected to draw fresh foreign capital—though analysts warn it could also mean more volatility. AI Boom, Debt Risks: Young Taiwanese investors are increasingly borrowing to chase AI-led stock gains, raising concerns about leverage amplifying losses. Semiconductor Sentiment: US 13F filings show institutions trimming some megacap tech while staying net buyers of semiconductors and AI infrastructure. Global Trade Pressure: US tariffs of up to 100% on imported drones deepen US-China tech decoupling, with knock-on effects for supply chains and allies. Regional Context: Japan’s defense white paper frames a protracted conflict scenario as China intensifies pressure in the Indo-Pacific.

US Drone Tariffs: President Trump signed a Section 232 order imposing 100% tariffs on “sensitive” drones and certain components, with 25% levies on smaller models; allied suppliers including the EU, Japan, South Korea and Taiwan face a capped 15% rate, effective Sept. 3 (with some component duties later). Trade Crackdown: In parallel, a White House report alleges a “shadow transshipment network” helping China evade tariffs via more than 40 countries, flagging India and several EU states as high-risk hubs. Taiwan Tech & Security: Taiwan says AI agents were used in autonomous cyberattacks on government systems, compromising accounts and extracting personnel data—raising fears of a new era of AI-driven cyberwarfare. AI-Driven Growth Theme: Taiwan’s economy is being positioned to grow fastest in four decades on AI demand, while Quanta Computer and Quantinuum announced a deal to build industrial-scale quantum computing infrastructure. Talent & Policy: Taiwan’s foreign graduate stay-for-jobs approvals jumped to 3,239 after a January policy change. Business & Markets: Apple’s Houston Advanced Manufacturing Center will start making the first US Mac mini by end-2026; APWC reported Q2 revenue of $136.6m, up 8% year-on-year. Local Life: New Taipei will restrict traffic around Tamsui’s Danjiang Bridge and Fisherman’s Wharf during fireworks on three Sundays; two hikers died and one was critically injured after hornet attacks in Kenting.

US–China Trade & Tariffs: President Donald Trump signed a proclamation imposing tariffs of up to 100% on imported drones and certain components, with a 15% rate applying to drones and parts from the EU, Japan, South Korea and Taiwan, and a 25% rate on smaller drones; the move takes effect Sept. 3 for drones, with some components later, as Washington cites national security and supply-chain dependence. AI & Semiconductors: Nvidia’s plan to mobilize over US$500 billion in third-party financing for AI data centers is expected to further entrench its global dominance and pressure China’s chip competitiveness; separately, China’s SMIC says AI-driven demand is lifting peripheral chip needs and won’t cut prices despite weaker phone and auto markets. Taiwan Cybersecurity: Taiwan reported an “abnormal” AI-assisted cyberattack using autonomous agents that targeted government systems over several days, raising alarms about the next phase of cyberwarfare. Taiwan Economy & Industry: Nanya Technology is quadrupling 2027 capital spending to about NT$200 billion (US$6.2B) as DRAM demand surges, including a major new DRAM fab in New Taipei. Cross-strait & Security: Taiwan detected multiple PLA aircraft sorties and PLAN vessels around its territory, while the island also ran mobile-network disruption drills simulating an internet blackout amid China threat concerns. Banking: DBS said Hong Kong head Sebastian Paredes will retire next year, with leadership changes affecting DBS Taiwan. Diplomacy & Business Ties: Taiwan and St. Vincent and the Grenadines marked 45 years of relations, with both sides signaling deeper cooperation and more business exchanges.

AI & Cybersecurity: Taiwan says it was hit by “abnormal” AI-assisted cyberattacks, with officials and experts describing an autonomous, multi-agent campaign that mapped government systems, compromised accounts, and targeted critical sectors including energy and nuclear safety. Defense Readiness: Taiwan staged air-raid and “urban resilience” drills, including throttling mobile internet and forcing businesses and drivers to follow evacuation rules. Trade Policy: The Trump administration flagged dozens of economies—including Taiwan, the EU, Japan, South Korea, India, Canada and Mexico—as higher risks for helping China evade tariffs via transshipment, and plans an AI-enabled “detective border” for customs screening. Foxconn/AI Manufacturing: Hon Hai said it will boost 2027 capex and expand AI-related manufacturing in Ohio, while reporting strong Q2 profit growth tied to AI server demand. Apple Supply Chain: Pegatron indicated the base iPhone 18 may be delayed to early 2027, with Pro models shipping in autumn. Shipping: Yang Ming posted a sharp Q2 profit jump on an early peak season driven by tariff and energy-cost shifts.