Taiwan Expands AI Adoption and Supply Chain Investment in 2027 Budget
BGA Taiwan Senior Adviser Rupert Hammond-Chambers wrote a client update on Taiwan’s 2027 budget.
Context
- Taiwan’s proposed 2027 central government budget allocates TWD 182.3 billion (US$5.7 billion) to technology development, up 9.5 percent from the original 2026 proposal. The proposal continues existing policies, including the Ten Major AI Infrastructure Initiatives and support for the Five Trusted Industry Sectors. New programs for 2027 cover rare-earth refining, quantum technology, domestic industry AI models, city AI pilots and satellite ground equipment.
- The Executive Yuan’s recently proposed 2026 supplementary budget includes financial support for Taipower and CPC. The proposed Taipower subsidy could ease pressure for electricity-rate increases, which would raise operating costs for AI data centers. However, approval by the Legislative Yuan remains unlikely.
Significance
- The government proposes TWD 40.6 billion ($1.3 billion) for the Ten Major AI Infrastructure Initiatives, up 25.3 percent from its 2026 baseline of TWD 32.4 billion ($1 billion). This total spans the general budget, special budgets and government funds and overlaps with the overall technology allocation.
- MOEA’s drone programs continue to support critical modules, international certification and shared testing services for supply chains independent of China. The Ministry of National Defense remains the largest source of demand. MOEA’s role is to help Taiwanese manufacturers meet military and civilian customer specifications and qualify for export orders.
- The separate 2026 supplementary budget proposes TWD 180.9 billion ($5.7 billion) in price-gap subsidies for Taipower, CPC and liquefied petroleum gas suppliers. This includes TWD 71.1 billion ($2.2 billion) to compensate Taipower for higher fuel costs absorbed without corresponding electricity-rate increases. Beyond the subsidies, a separate TWD 233.8 billion ($7.3 billion) capital injection into CPC would strengthen its finances and support investment in infrastructure such as liquefied natural gas terminals. The Taipower subsidy could ease pressure for higher tariffs and help contain electricity costs for AI data centers and semiconductor plants.
Implications
- Across ministries, AI funding seeks to build Taiwan’s software industry by supporting adoption in manufacturing and services. Drone programs focus on helping domestic suppliers develop components and meet customer specifications, and satellite investment expands both local R&D and commercial communications deployment.
- The main opposition party, the Kuomintang (KMT), has argued that CPC’s capital injection belongs in the 2027 annual budget and has threatened to remove it from the supplementary package. With relations between the government and opposition strained and local elections approaching November 28, approval of the proposed financial support for Taipower and CPC appears unlikely before the vote.
- MOEA’s electricity tariff review committee has deferred a decision on rate adjustments until December, pending greater clarity on government funding. If the subsidies remain blocked, pressure to raise electricity prices would increase, potentially affecting both residential and industrial users. Even after the election, concerns over household bills and industrial costs could constrain the scale and timing of any increase.
We will continue to keep you updated on developments in Taiwan. If you have any comments or questions, please contact BGA Taiwan Senior Adviser Rupert Hammond-Chambers at rupertjhc@bowergroupasia.com.
Best regards,
BGA Taiwan Team
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