AGP Executive Report

Factory Momentum: Taiwan’s industrial production rose 19% in September, marking 31 straight months of growth, as AI demand drove output to a record. Manufacturing sentiment hit a 54-month high, and export orders set a monthly record. Critical Materials: ITRI plans a rare-earth demonstration plant producing up to 500 tonnes a year by 2030—about half of Taiwan’s needs—as Chinese export controls heighten supply risks. TSMC is also exploring alternatives to rare-earth components in factory equipment. New Partnerships: Taiwan is seeking closer cooperation with Europe on trusted AI and drone supply chains, drawing on its strengths in chips, AI servers and drone production. A proposed technology park in Poland would focus on AI data centers, smart cities and EVs. Storm Fallout: Typhoon Champi caused an estimated NT$133 million in agricultural losses across 2,405 hectares, with garlic crops hardest hit.

Critical Minerals: Taiwan’s ITRI plans a rare-earth demonstration plant producing up to 500 tonnes a year, targeting half of domestic demand by 2030. Construction is slated to finish in 2028, as China’s export controls raise supply-chain concerns. TSMC is also seeking factory-equipment alternatives that avoid Chinese rare-earth components. Storm Disruption: Typhoon Champi killed one person and injured 527, cut power and forced widespread shutdowns, including the suspension of stock trading and nearly 1,000 flight cancellations. Factory Momentum: September industrial production rose 19% year on year, extending growth to 31 consecutive months, while manufacturers’ business sentiment reached a multi-year high. Workplace Safety: TSMC halted work at a Kaohsiung construction site after four workers were killed.

Typhoon Disruption: Champi brought Taiwan to a standstill, cancelling nearly 1,000 flights and closing the stock market as businesses and transport faced disruption. Economic Momentum: Industrial production rose for a 31st straight month in September, manufacturers’ sentiment reached a 54-month high, and export orders set a monthly record, boosted by demand for AI and chips. Chip Supply Chains: TSMC is exploring factory-equipment alternatives that avoid Chinese rare-earth magnets, while Taiwan’s PCB output is forecast to hit a record even as supply risks grow. Labor Tensions: Micron workers in Taiwan staged a strike over profit-sharing, adding uncertainty to the memory-chip industry amid the AI boom. Energy Challenge: Taiwan’s small and midsize manufacturers face hurdles upgrading as renewable power remains difficult to secure. Competition Rules: Taiwan blocked Grab’s planned US$600 million Foodpanda acquisition, citing concerns about competition with Uber Eats.

AI Manufacturing: Taiwan’s electronics production has more than doubled in 2026, driven largely by Nvidia AI modules, while local PCB makers’ global output is forecast to hit US$35.7 billion. The boom is straining capacity, materials and equipment supply chains. Semiconductor Supply: TSMC is seeking factory-equipment alternatives that avoid Chinese rare-earth magnets, as it looks to reduce supply risks. Labor: Micron’s Taoyuan union staged a 24-hour warning strike, seeking a permanent bonus system tied to operating profits; a separate Taichung union reached a deal with the company. Business and Services: Taiwan blocked Grab’s US$600 million Foodpanda acquisition, citing competition concerns linked to Uber’s stake in Grab. Foxconn also plans to take a 50% stake in Mitsubishi Electric Mobility. Storm Disruption: Typhoon Champi shut schools, offices and financial markets, with more than 900 flights cancelled and nearly 1,300 people evacuated.

Platform Competition: Taiwan blocked Grab’s US$600 million Foodpanda purchase, saying Grab’s ties to Uber could weaken competition in the island’s delivery market. Labor: Micron workers at its Taoyuan plant staged a 24-hour strike over profit-sharing, while the company and a separate Taichung union reached an agreement. The Taoyuan action did not halt production. Supply Chains: TSMC is seeking factory equipment that avoids rare-earth magnets, aiming to limit exposure to China’s control of key materials. Mobility: Foxconn will buy a 50% stake in Mitsubishi Electric Mobility for about US$728 million, joining forces on next-generation vehicle systems. Chipmaking: TSMC halted work at its Kaohsiung fab construction site after four workers died in a fall. Chip Design: Taiwan’s Egis and France’s SiPearl will develop CPUs for AI, data centers and high-performance computing, with Egis targeting a chiplet tape-out next year.

Semiconductor Labor: Micron workers in Taoyuan began Taiwan’s first semiconductor industry strike on Oct. 22, seeking fairer pay and profit-sharing as AI demand drives record memory profits. Worksite Safety: TSMC halted construction at its Kaohsiung 2-nanometer site after four workers died in a fall, renewing attention to safety at major chip projects. AI Supply Chain: Nvidia is reserving capacity across six suppliers, including Taiwan’s KYEC, SPIL and Unimicron, to expand chip testing, packaging, substrates and optical engines as supply limits growth. Digital Services: Taiwan’s competition watchdog blocked Grab’s planned US$600 million acquisition of foodpanda, citing competition concerns and Grab’s ties to Uber.

Semiconductor Safety: TSMC halted work at its Kaohsiung 2nm construction site after a fall killed four workers, renewing scrutiny of safety as Taiwan races to expand chip capacity. AI Supply Chain: Nvidia plans to expand packaging, testing, substrate and optical capacity with six partners, including Taiwan’s KYEC, SPIL and Unimicron, as demand continues to outstrip supply. Micron Labor Dispute: A Taoyuan union says its one-day strike will go ahead on Oct. 22 over profit-sharing, despite a separate agreement with Micron’s Taichung union; any production impact remains unclear. Market Competition: Taiwan’s competition watchdog blocked Grab’s US$600 million foodpanda deal, citing concerns that Grab’s ties to Uber could weaken competition in an already concentrated delivery market.

Workplace Safety: TSMC halted steel-structure work at its Kaohsiung factory site and similar work across Taiwan after four construction workers died in an accident. Chip Labor: Micron’s Taoyuan union plans a one-day strike on Oct. 22 over bonuses and profit sharing, adding pressure as Taiwan competes for semiconductor talent. Semiconductor Supply Chain: Taiwan is tightening controls on AI chip exports to China, while BASF plans to expand its semiconductor materials operations on the island. AI Demand: September exports hit a record, rising more than 60% year on year, and TSMC plans a new Taiwan 3nm fab as chip demand outstrips supply. Industrial Reach: More than 200 Taiwanese automotive suppliers are heading to AAPEX in Las Vegas to pursue U.S. buyers seeking diversified supply chains.

Workplace Safety: Three contractor workers died and one was injured after a fall at TSMC’s Kaohsiung Fab 22 construction site. Work has stopped while authorities investigate a suspected structural failure. Chip Supply Chain: ByteDance, Alibaba and Tencent ordered more than 3 million Nvidia RTX PRO 5500 cards, worth over US$35 billion at list prices, but Nvidia warned it may fill only a fraction of the orders. Micron’s Taoyuan union plans a one-day Oct. 22 strike over bonuses and profit-sharing, adding labor uncertainty as AI memory demand grows. AI-led Expansion: TSMC plans 3nm production at its second Japan plant, while Starlux is adding flights to technology hubs to meet rising chip-industry travel and cargo demand. Energy and Industry: National Tsing Hua University and NuCube will explore a U.S.-made microreactor for research and medical use, subject to regulatory approval. Offshore-wind developer CIP has also criticized Taiwan’s troubled auction rounds, renewing questions about project costs and viability. Trade and Manufacturing: Taiwan is tightening controls on AI chip exports to China and building a domestic supply chain for back-contact TOPCon solar technology.

Micron Labor Dispute: A Taoyuan union plans a Thursday strike over bonuses, adding pressure at a key DRAM and HBM production hub as talks continue with Taichung workers. Chip Export Controls: Taiwan is preparing to make unauthorized exports of advanced AI chips and servers to China a criminal offense, though the rules’ start date is still unclear. TSMC Expansion: Record AI-fueled quarterly results are strengthening the case for more capacity, while Taiwan plans a Texas industrial park to support chip suppliers serving the US market. EV Supply Chain: Hon Hai will buy a 50% stake in Mitsubishi Electric’s mobility business, deepening its push into automotive components. Energy Policy: A National Tsing Hua University scholar says Taiwan needs clear targets, funding rules and waste-management plans to turn support for advanced nuclear power into viable projects.

EV Manufacturing: Foxconn agreed to pay US$727 million for half of Mitsubishi Electric Mobility, forming a joint venture to develop EV platforms in Japan and target ¥1 trillion in sales by fiscal 2030. AI Hardware: Wiwynn, GUC and Ayar Labs demonstrated a live co-packaged-optics rack, a step toward deploying optical links in AI data centers. TSMC reported Q3 revenue of US$46.72 billion, up 41.2% year on year, with high-performance computing making up 68% of sales. Capacity Expansion: Micron opened a second AI memory packaging plant in Taichung, while MiTAC plans to invest NT$12.62 billion in Taiwan server manufacturing. Taiwan is also planning up to US$4 billion in Texas industrial parks to support AI chip suppliers. Renewable Energy: All turbines at the 1GW Hai Long offshore wind farm are now generating power, adding a major source of clean electricity to Taiwan’s grid.

Currency and Markets: Taiwan’s central bank says it may step in if the Taiwan dollar remains volatile after a sharp weekly fall, as foreign investors pulled funds from local shares amid AI-related jitters. AI Chip Supply Chain: TSMC posted a sixth straight record quarterly profit, with third-quarter revenue up 50.9% year on year, and plans up to US$64 billion in capital spending this year. AI chip demand still exceeds supply. Samsung is set to use TSMC’s 3-nanometer process for base dies in Nvidia’s next-generation memory chips, extending Taiwan’s role in the AI supply chain. Capacity Expansion: Micron opened its second AI-memory packaging plant in Taichung, while Unimicron is buying a former Bridgestone site to expand advanced-substrate capacity. Taiwan is also planning a US$4 billion Texas hub for AI chip suppliers. Automotive Manufacturing: Hon Hai is set to acquire a 50% stake in Mitsubishi Electric Mobility, expanding its automotive electronics business.

Chip Supply Chain: Samsung is reportedly turning to TSMC’s 3-nanometer process for base dies in Nvidia’s custom AI memory, bringing Samsung, SK Hynix and Micron into a shared production model. TSMC, meanwhile, posted a sixth straight record quarterly profit and raised its 2026 growth forecast as AI chip demand continues to outstrip capacity. AI Market Risks: A global selloff in technology shares is raising concerns that higher borrowing costs could slow AI infrastructure spending and hit Taiwan’s chipmakers and hardware suppliers. US Expansion: Taiwan plans a $4 billion Texas hub to bring chip suppliers closer to US manufacturers. Memory Manufacturing: Micron has opened a second AI memory packaging plant in Taichung, deepening local production capacity. Drone Exports: Thunder Tiger completed delivery of 1,520 attack drones to the US Defense Department, a $7.6 million order that tests Taiwan’s role in non-Chinese supply chains. Renewable Energy: All 73 turbines at Taiwan’s Hai Long offshore wind project are now generating power.

AI Supply Chain: TSMC says chip demand still exceeds capacity and has lifted its 2026 outlook, but a financing-driven sell-off in AI hardware stocks highlights the risk that rising costs could slow investment. US Expansion: TSMC is assessing Texas as a possible manufacturing base, while Taiwan plans a roughly US$4 billion Texas industrial hub to bring chip suppliers closer to US customers. Samsung’s US workforce investment shows the competition for skilled workers is intensifying. Taiwan Capacity: TSMC plans a new 3nm fab in Taiwan to meet AI demand. Micron has opened a second AI memory packaging plant in Taichung, and storage maker Phison reported a sharp revenue surge. Trade Policy: Taiwan is considering tighter controls on AI chip exports to China, adding another layer of change for semiconductor supply chains. Clean Energy: All turbines at the 1GW Hai Long offshore wind farm are now generating power, a boost to Taiwan’s electricity supply as industrial demand grows.

Semiconductors: TSMC reported record third-quarter profit of NT$763.1 billion and lifted its 2026 revenue growth forecast to about 44%, but CEO C.C. Wei said AI chip demand still far exceeds production capacity. The company plans another 3-nanometer fab in Taiwan. Supply Chains: Micron opened its second AI memory packaging plant in Taichung, with 2027 output already fully contracted. Taiwan is also planning a Texas industrial park, costing up to US$4 billion, to bring chip suppliers closer to US manufacturers. Trade Controls: Taipei plans to add advanced chips and AI servers to its controlled-goods list, making unauthorized shipments to China a criminal offense after legal changes. Energy: All turbines at the 1GW Hai Long offshore wind farm are now generating power, adding capacity as Taiwan’s AI boom raises electricity demand.

Chip Supply Chain: TSMC posted record third-quarter profit but says AI chip demand still exceeds capacity. It is assessing a Texas expansion, while Taiwan plans $2 billion–$4 billion industrial parks to bring local suppliers closer to US customers. AI Memory: Micron opened a second advanced packaging plant in Taichung, targeting surging HBM demand; bookings are full through 2027. Mobility: Hon Hai will pay US$728 million for a 50% stake in Mitsubishi Electric Mobility, combining Japanese vehicle-control and powertrain expertise with Foxconn’s manufacturing scale. Growth and Energy: CIER sees Taiwan’s 2026 growth reaching 12.16%, driven by technology. The 1GW Hai Long offshore wind farm is now fully online, with all 73 turbines generating power. Life Sciences: PharmaEssentia plans a US$46 million Puerto Rico plant in 2027 to expand production of its blood-cancer treatment and diversify supply.