Stable power supply necessary to sustain Taiwan’s semiconductor and artificial intelligence sectors

If Taiwan does not have enough energy, the semiconductor and artificial intelligence (AI) industries will not remain in Taiwan, commented Kuo Jyh-Huei, the new economy minister.

Kuo answered media questions at a tea party on May 30. He said that the total capacity of generating units commissioned in 2024-2025 will be 8.333 million kilowatts, significantly more than the 5.972 million kilowatts of decommissioned units, indicating that the power supply will be sufficient at least until 2030.

Despite Kuo’s industry experience, media questions focused on whether Taiwan would extend the life of nuclear power plants, potential changes in energy policy and the sufficiency of green energy for businesses, including small and medium-sized enterprises.

Kuo told reporters that the Ministry of Economic Affairs (MOEA) currently has no answer on whether the No. 3 Pingtung Nuclear Power Plant, currently the only operating nuclear power plant in Taiwan, will be expanded or closed, and that all actions will be taken in accordance with the law. The power plant is scheduled to stop producing energy in May next year.

Kuo emphasized that the decommissioning of nuclear power plants will not significantly affect energy supplies, but energy demand for AI applications may impact supply after 2027. Given that artificial intelligence may see rapid development between 2027 and 2029, he said “a third nuclear power plant could act as an emergency plan,” but stressed that such a plan would have to be legal.

To extend the operating life of the third nuclear power plant, current law – which mandates decommissioning after 40 years of operation and requires an extension application to be submitted five years before planned decommissioning – would need to be changed because the extension application period has already passed.

Many countries are restarting nuclear power plants due to skyrocketing natural gas prices caused by the Russia-Ukraine war, which has increased Taiwan Power Company (Taipower) fuel costs by NT$700 billion. However, electricity prices cannot be adjusted accordingly because Taipower has political obligations, which makes it extremely difficult for Taipower to avoid losses, Kuo continued. He hopes that in the future, state-owned enterprises will be able to be managed stably and their shares will be listed on the stock exchange

Taiwan will lead in the production of AI chips and AI servers for the next 50 years

In addition to the power issues, Kuo mentioned that other countries are also looking to produce AI chips but are not doing well. Taiwan is leading in semiconductors, and AI chips and AI servers will allow Taiwan to lead for the next 50 years.

Kuo continued that 90% of the world’s AI servers are manufactured in Taiwan, and intelligent manufacturing and innovation are carried out in Taiwan. In the future, Taiwan should develop AI applications, especially in human health, as AI can help with early detection and treatment.

Kuo said his vision is for western Taiwan to be a technology industry development center and eastern Taiwan to be a health industry center, using preferential policies to attract reputable enterprises to invest in Taiwan.

Kuo emphasized Taiwan’s two main economic development strategies: “outbound domestic” and “inbound foreign.” The “Outbound Domestic” strategy involves moving Taiwan’s manufacturing parks abroad and encouraging Taiwanese companies to set up factories abroad. For example, Taiwan could establish a semiconductor industrial park in Kumamoto, Japan, incorporating the Taiwanese supply chain to serve both TSMC’s Japanese venture (JSAM) and local Japanese companies, thereby entering the Japanese market.

The “Inbound Foreign” strategy aims to attract foreigners to Taiwan. Starting from Taoyuan, there are 400 million people within a 3-hour flight radius. Taiwan can consider this population as its domestic market, inviting them to taste Taiwan’s exquisite cuisine, medical aesthetics and other high-end services, thereby increasing Taiwan’s influence in the international community.