Taiwan’s “AI New Ten Major Constructions”: Building a Silicon Photonics Hub in Kaohsiung

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The Taiwanese government has launched a new national initiative called “AI New Ten Major Constructions.” Its main goal is to merge AI, semiconductors, and photonic technology into a unified industrial strategy. A central focus of the plan is the creation of a Silicon Photonics development hub in Kaohsiung, Taiwan’s southern industrial center.

Pulse

This initiative goes far beyond a simple tech investment program. Taiwan has recognized that the real bottleneck in AI computing is no longer transistor size, but energy efficiency, latency, heat, and bandwidth. And the country believes the solution lies in light, not just electrons.

By establishing an ecosystem that connects AI chips, optical communication, advanced packaging, and compute infrastructure, Taiwan is sending a clear signal to the global semiconductor industry: the next phase of AI hardware will be shaped by photonic integration and power-efficient architectures.

Policy Overview

The National Development Council (NDC) has unveiled an ambitious plan to rebuild Taiwan’s industrial and technological backbone for the AI era. This project aims not just for digitization, but for a complete restructuring of talent development, R&D pipelines, and production networks around intelligent computing.

According to the NDC, the program targets NT$15 trillion in production value by 2040 and aims to create 500,000 high-income jobs, elevating Taiwan into the Top 5 AI nations globally.

The National Development Fund (NDF) will directly invest over NT$10 billion in AI, green technology, and robotics startups to support this vision.

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Why Kaohsiung?

Kaohsiung has long served as the industrial powerhouse of southern Taiwan, home to strong manufacturing, packaging, and optoelectronic capabilities. With the addition of a national AI data center in Shalun and Foxconn’s compute hub, the region is poised to become a complete AI photonics ecosystem, where chip design, packaging, computation, and applications coexist in one place.

AI Strategica believes that this marks a structural shift in Taiwan’s innovation landscape: the north (Hsinchu–Taipei) will continue to serve as the design and R&D hub, while the south (Kaohsiung–Tainan) evolves into a center for AI hardware development and production.

What the Global Industry Should Watch

1. Acceleration of CPO and Silicon Photonics Industrialization
Taiwan has officially designated Co-Packaged Optics (CPO) as a national strategic priority.

This move signals a broader industry shift from traditional electrical packaging to optical integration, potentially redefining global supply chains for AI chips, accelerators, and data center hardware.

2. Rise of Place-Based AI Industrial Clusters
Taiwan’s southern “AI Belt” combines manufacturing, testing, and compute infrastructure within a single region.

This reflects a global transition where AI infrastructure is becoming geographically distributed, with localized compute and fabrication hubs replacing centralized cloud models.

3. Policy-Driven Capital and Technology Standards
The National Development Fund’s direct investments demonstrate a new model of state-guided innovation, where public funding actively shapes technological direction.

This approach could influence how emerging tech ecosystems evolve in other countries as well.

4. Convergence of Post-Quantum Cryptography and Robotics
The initiative also covers Post-Quantum Cryptography (PQC) chips and AI-driven robotic motion control systems.

This reveals Taiwan’s intent to fuse optical interconnects, AI control, and hardware-level security within the same industrial framework — an important cue for global AI hardware makers.

Global Implications

Taiwan’s “AI New Ten Major Constructions” represents more than just an infrastructure upgrade; it’s a strategic signal about the direction of global AI hardware. The bottleneck of this era is not raw computing power alone, but how efficiently we can move data — faster, cooler, and with lower energy cost.

By betting on photonic technologies to complement AI computation, Taiwan is redefining how nations approach next-generation compute architecture. The coming decade may prove that the next revolution in AI chips won’t come from smaller transistors, but from semiconductors that compute with light.

Summary Table: Taiwan’s AI New Ten Major Constructions (Key Focus Areas)

Strategic Questions to Consider

At AI Strategica, we don’t just report these developments — we translate them into strategic foresight for decision-makers navigating the next wave of AI-driven industrial transformation.  Let’s narrow down with following questions.

How will the rise of Silicon Photonics and Co-Packaged Optics (CPO) reshape the global balance of semiconductor supply chains?

As data-center architectures shift from electrical to optical interconnects, who will control the new chokepoints in design, materials, and packaging?

Can nations and companies sustain competitiveness if their AI strategies remain centered on transistor scaling rather than data-movement efficiency?

The Kaohsiung model suggests that the next wave of advantage may lie in energy-efficient interconnect innovation, not just process nodes.

What forms of cross-industry collaboration will be required when photonics, AI computation, and robotics begin to converge?

When optical communication, AI motion control, and post-quantum security merge, new partnership models between chipmakers, optics firms, and system integrators will become essential.

How should investors and policymakers interpret Taiwan’s state-guided innovation approach?

If capital and technology standards are now being coordinated by public agencies, what new frameworks will private industry need to align with—or challenge?

Strategic questions arising at this critical juncture of industry change have been included in the CoreBrief prepared by AI Strategica.

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