Asia Silicon Valley 2.0 Propels Taiwan's Digital Innovation Ecosystem

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Interview with Ho Chin-tsang, Director General of the Small and Medium Enterprise Administration, Ministry of Economic Affairs, and Hsu Tseng-ju, Director General of the Department of Academia-Industry Collaboration and Science Park Affairs, Ministry of Science and Technology

In 2018 and 2019, Taiwan was placed by the World Economic Forum alongside the sci-tech powerhouses of Germany, the United States, and Switzerland as one of the world's most innovative countries. The country also measured fourth in the National Entrepreneurship Context Index found in the "2018/2019 Global Report" published by the London Business School and Babson College. Taiwanese startups have yielded dazzling results in both their capabilities and ecosystems thanks to the country's dual-pronged strategies of government policymaking and global corporate investment. Following the government's launch of the Asia Silicon Valley Development Plan 2.0 (ASVDP 2.0) in 2019, Google invested NT$26 billion to expand the company's data center operations on the island. It additionally kicked off the Intelligent Taiwan program in 2020, when the pandemic was at its peak. In the same year, Microsoft chose Taiwan to be the site of its IoT Center of Excellence and an Azure regional datacenter, and also expanded its cloud system R&D teams within the country. As the world enters an era of digital transformation, Taiwan is moving towards new digital economy models in innovation and entrepreneurship, taking the lead with a solid industrial foundation, outstanding talent in science and technology, and highly efficient government leaders.

New Digital Economy Models Bring Fresh Energy to Taiwan

In the past, large industrial countries such as the United States, Germany, Japan, and China focused on manufacturing and petroleum. The rise of Industry 4.0 and an Internet and mobile-driven digital economy, however, has triggered a shift towards digital industrial upgrades and transformation. The innovative business models that have emerged have fostered unicorns and a multitude of small startups. These unicorns are fluent in cutting-edge digital technology and innovative services and are keen to introduce a new culture of entrepreneurship. They are also spearheading a new wave of economic development as innovation continues to go global. 

Ho Chin-tsang, Director General of the Small and Medium Enterprise Administration, MOEA, and Hsu Tseng-ju, Director General of the Department of Academia-Industry Collaboration and Science Park Affairs, MOST, both believe that opportunities are limitless for Taiwan in the present wave of international innovation and entrepreneurship. Ho noted that Taiwan excels at utilizing domestic resources to drive ventures and continues to be an active investor towards placing home-grown startups on the international stage. Hsu emphasized that Taiwan boasts strong adaptability and practical R&D and manufacturing capabilities to face the drastically changing times. The country may not be as large as the United States and other major European countries, but it has the ability to identify outlets for its technology with precision and speed and to develop its market advantages. In response, the government enacts flexible policies that can be amended to adapt to such changes.

To build an internationally competitive startup ecosystem, accelerate the growth of ventures, and digitally transform national developments, the Ministry of Economic Affairs (MOEA), Ministry of Science and Technology (MOST), and Ministry of Education (MOE) jointly launched the Asia Silicon Valley Development Plan (ASVDP). Its main purpose was to develop a "Optimizing Startup and entrepreneurship ecosystem." The government additionally launched the Action Plan for Enhancing Taiwan's Startup Ecosystem in February 2018. 

In northern Taiwan, the plan has since assisted the Taiwan Tech Arena (TTA) with cultivating 480 teams and FinTechSpace with introducing 43 new startup teams and one international accelerator. The Linkou Startup Terrace, which focuses on AIoT and healthcare, has joined with local industries to create a sandbox for innovation and startups. The campus is also home to the Amazon Web Services Joint Innovation Center (AWS JIC) and 21 accelerators, which have attracted over NT$1.57 billion in venture capital. To the south, support is being provided with the launch of the Yawan Startup Terrace in Kaohsiung and the Asia New Bay Area 5G AIoT Innovation Park project. Residency is being prioritized for startup teams and international accelerators specializing in 5G, AIoT, the use of smart technology in entertainment, exhibitions, and manufacturing, as well as those conducive to creating a smart port city. These measures have led to two outstanding achievements. The first is an agreement in 2020 between CISCO and domestic industry players to build the first experimental 5G open network platform. The second is the opening of Google’s R&D base in Banqiao earlier this year. The office is the company's largest hardware R&D base outside of the United States. It is evident that the ASVDP has successfully attracted major international companies to invest in new resources in Taiwan. Such investments have aided domestic companies with digital transformation and strengthened their innovative dynamism.

Asia Silicon Valley 2.0 Fosters Taiwanese Unicorns 

Taiwan’s westward expansion towards China in 1990 placed Taiwan on the edge of an industrial and economic recession. Fortunately, the country continues to demonstrate its unrivaled superiority in the arena of semiconductor-based technology. Taiwan’s excellent epidemic prevention efforts, the return of Taiwanese businessmen and the effects of the US-China trade war have all allowed the country's economy to continue growing in recent times. Under these circumstances, the Executive Yuan approved the ASVDP 2.0, which centers on two important areas. The first is smart networking, incorporating AI, 5G, and other digital technologies to accelerate an industrial evolution. The second is startups. With the message "From Start-up to Scale-up," the government is helping startups to forge connections worldwide by seeking global capital and outstanding talents as well as inviting international companies and startups to Taiwan. It is hoped that this will greatly boost the rapid growth of startups and the drive of other industries in the times to come.

Ho remarked on the importance of creating a startup ecosystem and how the MOEA's Startup Portal provides consultations, guidance, and innovative resources to help startup teams grow. At present, both Appier and Gogoro are unicorns certified by the Taiwan government. Their use of internationalization as their key strategy indicates that the deployment of Taiwanese startups in the global market and the search for overseas partners and investments are crucial for success. Hsu believes that this makes the optimization of Taiwan’s overall startup ecosystem all the more important. She also stated that in recent years, emphasis is being placed on linking the government, industries, and universities, as well as implementing effective measures to foster startups, and building up domestic brands to attract overseas collaborations. These actions will lead a sustainable startup ecosystem that continues to support innovation and entrepreneurship and to foster more Taiwanese unicorns.

Accelerating Industry-Academia Collaboratives Enhance Taiwan's Startups

Taiwan acquired integrated circuit technology from Radio Corporation of America (RCA) in 1976. The technology was gradually industrialized after years of efforts by the Industrial Technology Research Institute (ITRI) and the government. This led to the rise of companies such as United Microelectronics Corporation (UMC) and the Taiwan Semiconductor Manufacturing Company (TSMC), which have made full use of Taiwan's edge in semiconductor manufacturing. Hsu believes that a fairly developed model of talent cultivation and industry-academia collaboration already existed in earlier times. With advantages and opportunities, science and technology has flourished under inter-ministerial efforts. Startups and tech industries have constructed a comprehensive ecosystem that suits the objectives of industry-academia collaboratives as well as industry and technology parks. This has turned such collaborations into a powerful force for the development of innovation and entrepreneurship.

In the many years that MOST has offered financial and technical support to the academic community, Hsu stated that the most remarkable results can be seen in the cultivation of in-demand talent. It is here that academic results can be directly implemented and industrialized. The Department of Academia-Industry Collaboration and Science Park Affairs works with industries to encourage academia-industry projects. By combining the research capacity of universities through alliances and the Academia-Industry Research Center (referred to as the AIR Center program), such projects enable academic research to aid industries with the research and development of forward-looking technology. They also serve as a pipeline for participating masters and doctoral students to directly enter into the industry after graduation. As a result, this narrows the gap that separates industries from research and academia. 

Ho believes that education can spark inspiration. Education in entrepreneurship does not need to be restricted to higher education; it can even be integrated into the primary school level. Cultivating an entrepreneurial mindset early on will allow people to imagine the impossible for future startups and innovation. In an ever-changing world, the current approach towards educating talent is becoming increasingly disparate from the model launched by the MOEA in 1997. However, the government continues to gather resources across ministries for startups and to consolidate the research capabilities of academia to attract youths and to develop the next generation of talent and technology. The Young Entrepreneur Dreams Program was launched in 2020 to provide young Taiwanese with entrepreneurial services centered on training, startup consultations, digital applications, and local connections. Ho stated that an entrepreneurial ecosystem is required to both connect local and international startup service organizations and gather funds and talents with efficiency. This is the purpose of the Access to Taiwan A2T program launched in 2020. By partnering with international startup organizations, the program aims to encourage tech startup teams from abroad to develop in Taiwan.

National Startup Teams Forge Global Connections

In the face of global competition, Ho suggested the organization of national startup teams with strong foreign language skills. Rather than continuing to rely on domestic markets, future success lies in looking abroad. Possessing exemplary language skills will be crucial to overcoming any cultural barriers that may arise. The provision of training courses will also allow Taiwan’s strengths to find outlets among startup industries across the world. If startups can find partners in Taiwan, then the country can quickly join the international market. An example of these measures in practice is the Taiwan Accelerator Plus (TAcc+) program. The international accelerator has introduced resources from successful entrepreneurs and professionals in Silicon Valley. Built on open innovative and strategic ventures, the client-oriented accelerator fosters startup teams and links Taiwan’s AIoT and healthcare technology to the global market. It also connects international startup teams with Taiwanese industries and startups by providing global training courses.

Academia must expand beyond research and consider the development of in-demand commercializable technology. Hsu remarked that through the U-start Plan for Innovation and Entrepreneurship, MOST links university professors conducting tech R&D to corporate resources both domestically and internationally. This not only adds value to the commercialization of their research results, but also fulfills the program's goals of fostering innovation and entrepreneurship. The Taiwan Tech Arena (TTA) is an even larger driving force to help startup teams go global. It holds a prominent international exhibition annually to match and market participating ventures. In recent years, MOST has led startups to participate in local and global exhibitions such as the Consumer Electronics Show (CES) held online earlier this year. More than 100 teams were selected to showcase their results in the TTA's virtual pavilion. Teams were also led to take part in the Viva Technology exhibition in France, the Hello Tomorrow summit in Singapore, and the MWC Barcelona trade show in Spain. Because their works are presented online in Taiwan-themed pavilions, they have been unhindered by the pandemic and continue to build global connections and find international investors for future opportunities. Some may ask why international startup teams would want to come to Taiwan. Hsu believes "the main reason is the long-lasting strength of Taiwan's software and hardware technology, which serves as a good incentive and advantage for the development of new startup teams."

Taiwan Startups Create a New Global Image

The advancement of AI and 5G technology has fueled the explosion of IoT and startup ecosystems worldwide. In response, ASVDP 2.0 is taking steps to introduce AIoT and digital technology, expand domestic sandboxes, and strengthen systems to integrate global exports. The plan has enabled new ventures to accelerate their growth. This has not only created an image for Taiwan's national startup brand Startup Island TAIWAN, but has also amassed vital energy for the country to become a powerhouse of digital innovation in Asia. To date, the government has invested over NT$220 billion in resources and capital. This includes NT$10 billion to promote innovation and entrepreneurship, NT$60 billion to provide venture lending for young entrepreneurs, and NT$150 billion in angel investments and funds for creatively transforming industries.

According to the latest statistics of the ITRI's Industrial Economics and Knowledge Center, Taiwan’s global market share in IoT has reached 4.61%, exceeding a value of NT$1 trillion in 2018 and NT$1.54 trillion in 2020. With the introduction of AIoT technology, Taiwan's global market share is expected to exceed 5% in 2025, reaching an output value of over NT$2 trillion before 2023. At present, the government is taking steps to import overseas resources, loosen laws and regulations for the recruitment of foreign professionals, and lower the threshold for obtaining permanent residency. It is also bringing in international accelerators through the TTA, Linkou Startup Terrace, and the planned Yawan Startup Terrace. This will connect domestic startups to international resources and promote the Startup Island TAIWAN brand.

Government focus is being placed on the development of the new NEXT BIG project. Building upon IoT, Taiwan is utilizing its startup potential and the high-quality image of its national brands to showcase the country's extraordinary achievements around the world. In this regard, Ho and Hsu agreed that active government action is the main axle in securing a future for startups, while the abundance of sci-tech talent will drive the growth of domestic brands. Together, they will create the optimal environment for new ventures to take root in Taiwan and spread across the world. This will create a new digital ecosystem where Taiwan reigns as startup central in the Asia-Pacific region.

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