Meanwhile, AI data centers are emerging as a major new demand source. GMI Cloud, a US-Taiwan venture, is constructing a 16 megawatt GPU compute facility in Taoyuan for AI inference workloads, and Foxconn’s planned Kaohsiung complex, developed with Nvidia, is expected to reach 100 megawatts at full capacity. That will make it one of the largest dedicated AI datacenters in the region.
This comes at a time when TSMC’s fabs already consumed 6.4% of Taiwan’s total electricity in 2021, a figure that has no doubt increased since . Even if demand from AI clusters grows more slowly, the combined load from fabs, data centers, and industry-wide AI adoption may outstrip Taiwan’s grid capacity.
At the time of writing, no new generation capacity is currently online to absorb the expected surge. A public referendum on restarting one of Taiwan’s decommissioned nuclear reactors failed in 2025, limiting the government’s options. Liquid natural gas (LNG) supplies are imported — up 35% between 2019 and 2024 — and analysts warn that Taiwan has less than two weeks’ worth of on-island gas reserves in the event of a blockade or supply interruption.
Unless the government accelerates investment in potential solutions such as grid-scale battery storage, offshore wind, or new peaking generation, AI infrastructure growth could be rationed by available electricity long before the country reaches its top-five computing power target.
Ultimately, Taiwan’s strength in semiconductors is both an enabler and a complication for its AI strategy. TSMC continues to produce the overwhelming majority of leading-edge AI accelerators for Nvidia, AMD, and other clients, and is now also ramping up chiplet integration capacity for emerging multi-die designs. As more AI training shifts from monolithic dies to heterogeneous chiplet platforms, Taiwan is well placed to take on more of the advanced packaging and silicon photonics interconnect work.
But that same strength has made Taiwan central to the tech policies of both the United States and China. The CHIPS and Science Act is backing onshore semiconductor capacity in the U.S., but also export controls on advanced GPUs are reshaping global AI hardware supply chains, cutting off major Chinese customers from top-tier Taiwanese chips.
While Taiwan’s AI ambitions are not directly constrained by those rules, it will have to navigate challenges like export market fragmentations and customer realignment. Its goal of building a national AI computing platform and sovereign AI data storage hub is also unlikely to align fully with U.S. security doctrine, which is pushing for increased localization.
If Taiwan’s strategy succeeds, it could become a global hub not just for manufacturing AI hardware, but for hosting and serving high-end compute workloads to the rest of the world. If energy, security, or market alignment issues intervene, however, much of the capital now flowing into AI infrastructure may end up diverted or stranded.
As it stands, the technical capacity is there. But without reliable power and a clear external policy framework, the vision of Taiwan as a fully realised “AI island” remains aspirational.
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Luke James Social Links Navigation Contributor Luke James is a freelance writer and journalist. Although his background is in legal, he has a personal interest in all things tech, especially hardware and microelectronics, and anything regulatory.
Key considerations
- Investor positioning can change fast
- Volatility remains possible near catalysts
- Macro rates and liquidity can dominate flows
Reference reading
- https://www.tomshardware.com/tech-industry/semiconductors/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/semiconductors/taiwan-to-spend-billions-on-ai-island-push-despite-grid-risks#main
- https://www.tomshardware.com
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