Taiwan Unveils $100B Economic Reform Plan After Trump Said It Should 'Pay Us For Defense:’ Will Fuel Nvidia, TSMC And Apple iPhone Assembler’s AI Plans

Taiwan’s Premier Cho Jung-tai has announced a sweeping economic and social reform plan, aiming to attract nearly $100 billion in investments. This comes after former President Donald Trump said “Taiwan should pay us for defense.”

What Happened: The reform plan would focus on energy, artificial intelligence, and infrastructure. The strategy includes appealing to Taiwanese investors disillusioned with conducting business in China, a trend the government aims to capitalize on, said Premier Cho in an interview with Nikkei Asia.

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The plan is in line with President Lai Ching-te‘s vision of a “smarter, forward-looking sustainability,” exploring ocean and space industries, and enhancing Taiwan’s global presence.

Despite the opposition’s majority in parliament, Cho is determined to push forward with the reform, which aims to revitalize the Democratic Progressive Party following Lai’s re-election in January.

The plan includes the establishment of an Economic Development Commission, chaired by Cho, to oversee a $100 billion investment in development.

Cho also emphasized the need to address concerns over livelihoods and housing and to attract Taiwanese investors who have turned away from China’s business environment. He stated, “China is no longer an attractive investment environment from a legal or political point of view. Many Taiwanese companies are coming back to Taiwan.”

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Another top priority for Cho is energy security. From 2023 to 2026, many existing power plants are scheduled to shut down, making it a critical period.

Next year, the last reactor at Taiwan’s Third Nuclear Power Plant is scheduled for retirement. However, Cho indicated that a proposal to extend nuclear service should have been made five years ago. While the government is open to exploring future atomic energy systems, he emphasized that “tomorrow’s technologies won’t help our power demand today.”

The urgency has intensified as NVIDIA Corp (NASDAQ:NVDA), the world’s leading AI chip developer, along with contract manufacturer and Apple Inc. (NASDAQ:AAPL) biggest iPhone assembler Foxconn Technology Group and server maker Super Micro Computer Inc (NASDAQ:SMCI), announced plans to build new supercomputer or AI data centers in Taiwan. Additionally, Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) and other chipmakers are expanding their capacity.

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Why It Matters: The announcement comes at a critical time for Taiwan, which is navigating complex geopolitical and economic challenges.

Recently, U.S. President Joe Biden‘s withdrawal from the presidential race led to a dip in shares of major Taiwanese companies like TSMC. This underscores the volatility and sensitivity of Taiwan’s market to international political events. Former President Donald Trump‘s recent comments suggesting Taiwan should pay for its defense have raised concerns about the future of U.S. support.

Moreover, the rapid growth of AI technologies is putting pressure on Taiwan’s infrastructure. Chief Telecom‘s President Jacky Liu has called for a complete redesign of data centers to meet the demands of AI computing, highlighting the urgent need for infrastructure upgrades.

President Lai Ching-te has also publicly thanked Micron Technology Inc.‘s (NASDAQ:MU) CEO for ongoing investments in Taiwan, emphasizing the importance of foreign investment in sustaining Taiwan’s technological edge.

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