AGP Executive Report

Semiconductor Labor Flex: South Korea is weighing a plan to relax the 52-hour workweek for R&D staff in its planned Gwangju-Jeonnam mega special zones, offering exemptions from limits on hours, holidays, overtime and night shifts to boost high-tech competitiveness. Cross-Strait Trade Tensions: China’s Taiwan Affairs Office again blamed Taiwan’s DPP authorities for obstructing ECFA implementation, while also criticizing Taiwan over coast guard patrols and accusing Japan/Philippines of illegal maritime moves near the Taiwan area. US-Taiwan Investment Pipeline: The U.S. Commerce Department named Andrew Silberstein to lead the Investment Accelerator, which is set to execute partner commitments including about $250 billion from Taiwan across semiconductors, energy and critical minerals. AI Chip Race: Reports say Anthropic is exploring a custom AI chip with Samsung, adding pressure to Nvidia; meanwhile, Amazon is rumored to be moving toward in-house processor design using a Taipei-based AI chip designer. Market Mood: Taiwan and South Korea stocks slid as investors reassessed AI bets amid chip selloffs, with TSMC and other AI-linked names under pressure. Supermicro Probe Spillover: Taiwan authorities detained Supermicro staff in a probe tied to alleged Nvidia AI-server smuggling into China, keeping investor risk front and center. Health Innovation Call: Taiwan’s “Go Healthy with Taiwan 2026” campaign opened a new global Top 20 mentorship program to turn health ideas into market-ready solutions.

TSMC Expansion: Taiwan’s MOEA approved TSMC’s US$20 billion capital injection into its wholly owned U.S. unit, TSMC Arizona, for a 12-inch fab and advanced packaging—bringing MOEA-cleared U.S. investment to US$44 billion. Cross-strait Trade Clash: Taiwan’s MAC said dependence on China is at a historic low as exports and investment shares keep falling; Beijing countered that ties remain close. Security & Drones: A top U.S. diplomat urged Taiwan to build a “hornet’s nest” of air, surface and subsurface drones to deter China, as Taiwan’s drone spending debate continues. Markets Mood: Wall Street was mixed as chip stocks slid again and oil eased; Asia saw sharp tech-led drops, with South Korea’s Kospi down nearly 8%. Food Safety: Taiwan recalled about 1,300 tonnes of cooking oil products after benzopyrene levels exceeded legal limits. Health Policy: Taiwan is considering limited relaxation of morning-after pill access amid backlash over proposed traceability rules. AI/Robotics Funding: Luxonis raised $14 million Series A to scale its physical AI perception cameras, targeting industrial automation demand. Biotech Footprint: YD Bio expanded its U.S. clinical lab licenses to cover 46 states, supporting blood-based early cancer detection operations.

AI Chips & Supply Chains: Taiwan prosecutors raided Super Micro’s Taiwan office and related sites in an expanding Nvidia AI-server smuggling probe, detaining two employees and an Albatron manager and seizing about 50 servers allegedly shipped via forged documents to restricted China markets. Semiconductor Funding: Inference chip startup Etched emerged from stealth with $800m funding, a working chip built on TSMC’s N4P process, and $1b+ in customer contracts, while setting up a Taiwan factory and data center. Cross-Strait & US Ties: A Taiwanese delegation led by Legislative Speaker Han Kuo-yu met U.S. Defense and White House officials, with Washington reiterating unchanged support for Taiwan and discussing joint research and unmanned vehicle development. Crypto Policy: Taiwan’s legislature passed sweeping crypto and stablecoin regulations, setting licensing and reserve mandates under the FSC’s sole oversight. Business Travel: EVA Air launched nonstop Washington–Taipei service, adding a new North America gateway with four weekly flights. Regional Markets: Hong Kong’s stocks lagged in H1 amid sluggish consumer spending and AI trade risks, with analysts pointing to IPO lock-up supply and potential exchange measures. Global Trade Tensions: China’s new export controls on 40 Japanese firms amid rising Japan–China tensions added pressure to regional supply chains.

Crypto Regulation: Taiwan’s legislature cleared dedicated crypto rules, putting stablecoin and exchange oversight under the FSC and tightening licensing requirements. AI & Semiconductors: Taiwan stepped up enforcement in the Nvidia AI chip smuggling probe, with raids at Supermicro and supply-chain partners raising pressure on server makers and exporters. Cross-Strait & Legal Risk: President Lai warned that China’s new “ethnic unity” law—effective July 1—could threaten Taiwanese people and businesses through broad, extraterritorial liability. Finance & Wealth: UBS reported global wealth growth accelerated in 2025, with Taiwan among markets seeing strong gains; the same period also saw a record surge in new millionaires. Payments & Web3: LINE NEXT plans to launch Unifi Pay in Q3 2026, enabling stablecoin payments (USDT/JPYC/IDRP) with zero merchant fees and instant settlement claims. Tourism & Mobility: The Philippines extended visa-free entry for Taiwanese visitors to 14 days through June 30, 2027, while Taipei Metro is set to add credit card and mobile payments. Media & Talent: Netflix expanded its Taiwan film talent programs, adding producer training and new post-production pathways.

AI & Markets: India’s RBI warned that AI-stock rallies are creating concentration risk, saying a sell-off in a small group of AI-linked firms could trigger broader market drops and spill over via wealth effects. Semiconductor Supply Chain: Taiwan stepped up enforcement against AI hardware diversion to China, with raids on Super Micro and connected firms tied to Nvidia chip smuggling allegations. AI Chip Startups: Etched emerged from stealth with $800M funding to build AI inference chips using TSMC’s N4P process, targeting rack-scale systems and production contracts. Wealth & Banking: UBS reported strong global wealth growth in 2025, while CTBC Bank highlighted AI-driven transformation and record 2025 profit as it expands overseas. Geopolitics & Trade: China’s new “ethnic unity” law drew Taiwan expert concerns over extraterritorial reach, while global markets tracked a fragile US-Iran ceasefire that eased oil prices and helped lift equities. Consumer/Local Business: Taipei Metro began accepting credit card payments, and Taiwan’s workplace bullying rules and crypto-firm regulation continued to shape the business environment.

Taiwan’s AI supply-chain crackdown: Taiwan prosecutors expanded raids tied to alleged Nvidia AI chip/server smuggling to China, Hong Kong and Macau, searching Super Micro’s Taiwan office plus two local firms and homes of suspects; investigators seized servers in May and now say nine people are under probe. Manufacturing rebound: Taiwan’s manufacturing business sentiment rose in May to the highest since March 2025, with AI-driven demand and easing Middle East risks cited by TIER. Crypto regulation: Taiwan’s legislature passed a law creating a licensing and enforcement framework for crypto firms and stablecoin issuers, including reserve and audit rules. Trade and production shift: Taiwan’s domestic production share of export orders hit a record 52.9% in 2025 as firms reduced reliance on China/Hong Kong amid US-China tensions; ASEAN’s share also climbed. Tech risk for Apple ecosystem: A ransomware breach at Tata Electronics in India reportedly exposed iPhone 18 Pro supplier lists and prototype photos on the dark web, raising fresh concerns for Apple’s global supply chain. Payments and mobility: Taipei Metro will accept major credit cards and mobile wallets from July 1 (but not for frequent-rider rewards), while THSR reopened a long-unused “secret passage” at Taipei Main Station to cut peak congestion. Design and branding: Taiwanese designer Hsieh Jen Lee’s modular armchair “Day Go” won a Bronze A’ Design Award, highlighting Taiwan’s design and sustainability push.

AI Chip Supply-Chain Crackdown: Taiwan prosecutors raided Super Micro’s offices and related sites in a widening probe into alleged smuggling of Nvidia AI servers to China, a move that reignited export-control risk for the AI infrastructure supply chain. Wealth Management Moves: UBS named new senior leaders for Asia-Pacific wealth management, including Damien Hsiao as Taiwan head of global wealth management and co-head appointments for Taiwan domestic business. Semiconductor Mega-Spending: South Korea unveiled a near-$1.2 trillion push for semiconductors and AI, with Samsung and SK pledging massive domestic investment and accelerating new fabrication capacity. Global Finance Rebalancing: A survey found financial firms are pivoting expansion plans toward South Korea and other Asia markets while staying more cautious on China and India. Cybersecurity & Consumer Tech: A Reuters report said leaked files from Tata Electronics on the dark web include sensitive iPhone 18 Pro supplier/component lists and photos, raising supply-chain and pricing concerns for Apple. Cross-Strait/Maritime Pressure: China coast guard escorts public vessels near Japan-Philippines EEZ overlap, signaling jurisdictional pressure in waters close to Taiwan. Trade & Markets: US stocks ended higher as tech led gains, with Alphabet’s Dow debut boosting sentiment.

Cross-Strait Maritime Pressure: China’s coast guard escorted a state oceanographic survey ship inside Japan’s EEZ east of Taiwan, with vessels flanking the research ship for three days near Yonaguni—seen as a jurisdiction grab amid Japan-Philippines maritime talks. Export Controls Escalation: Beijing added 20 Japanese entities to a dual-use export control list and another 20 to a watch list, tightening licensing and requiring risk assessments, as tensions over Taiwan and Japan’s security posture deepen. Cloud Invoice Lottery Boost: Taiwan’s Ministry of Finance plans to add more NT$500 prizes to the cloud invoice lottery from July-December, potentially raising total prizes per draw to 4.05–4.25 million, after electronic receipt usage hit 67% by June 15. AI Chip Race in the Region: South Korea unveiled an $880bn (and up to $1tn) investment push for memory chips, AI data centers and robotics, aiming to double memory capacity in five years—fueling price pressure that could spill into consumer electronics. Aviation Demand: EVA Air said it plans direct flights to Delhi starting early December, targeting transit demand between South Asia and North America via Taipei. Innovation Link-Up: ICIE launched Explore2Expand Taiwan (July 29–Aug 2) to connect global entrepreneurs and investors with Taiwan’s semiconductors, AI and advanced manufacturing ecosystem.

Semiconductor Momentum: TSMC reported May 2026 revenue of NT$416.98 billion, up 30.1% year on year, underscoring how AI infrastructure demand is still driving Taiwan’s chip cycle. AI Supply-Chain Shift: DeepSeek released DSpark, an open-source speculative decoding framework that it says speeds up its V4-Flash responses by as much as 85% without retraining or new hardware—another reminder that “software efficiency” is becoming a key battleground. Cross-Strait Risk & Compliance: A Taiwanese official warned China’s new “ethnic unity” law, effective June 29, could restrict political neutrality and expose Taiwanese and Hong Kongers to legal pressure, including via business activity. US-Taiwan Business Access: Three US agencies urged US states and businesses to strengthen Taiwan ties, pushing trade, investment, education and tourism despite Chinese pressure. GDP Outlook Upgrade: Yuanta lifted its Taiwan GDP growth forecast for 2026 to 11.05%, citing resilient exports and AI-linked demand even as housing cools. Energy & Costs: CPC and Formosa cut gasoline and diesel prices again, tied to lower crude after Strait of Hormuz shipping improved. Green Trade Push: Taiwan’s Tea and Beverage Research Station helped tea producers add carbon footprint labels, aiming to boost EU competitiveness via green procurement. Corporate Profit Snapshot: CRIF Taiwan said the top 5,000 firms posted record 2025 net profit of NT$5.77 trillion, with TSMC the most profitable. Trade Outreach: Taiwan’s top diplomat led a delegation to Poland and Italy to deepen partnerships and set up Mandarin language centers across Europe. Demographics Watch: Single-person households with residents aged 65+ hit a record high, with Taipei and other cities accounting for nearly half of the total.

Taiwan-Europe Trade Push: Taiwan’s top diplomat Lin Chia-lung wrapped up a six-day Poland and Italy trip, leading a trade delegation focused on semiconductors, ICT and advanced manufacturing, and announcing Taiwan Language Centers across Europe to boost Mandarin education and talent exchange. AI Market Mood: Jefferies says the biggest risk to the AI trade isn’t chip supply, but investors realizing hyperscalers and major labs may struggle to earn returns—while Hong Kong IPO/placements activity tied to AI continues to surge. Semiconductor Supply Chain Pressure: A new report highlights advanced chip packaging as a growing bottleneck for AI systems, with TSMC both manufacturing and packaging most leading-edge chips—raising strategic concerns as demand strains capacity. Cross-Strait Security Watch: Taiwan’s defense ministry reported continued Chinese naval activity around the island, with multiple PLAN vessels detected over 24 hours after recent combat readiness drills. Regional Energy Cost Hit: Asia’s food vendors are feeling higher plastic costs as Middle East war-linked energy disruptions tighten petrochemical supply, pushing up bag and container prices in markets including Taipei. Global Capital Flows: FIIs are cautiously returning to India as the rupee stabilizes and volatility in South Korea and Taiwan eases, underscoring how Taiwan-linked tech swings can ripple into broader emerging-market money.

Taiwan-US Policy Talks: Legislative Speaker Han Kuo-yu met U.S. House Speaker Mike Johnson in Washington, pressing for passage of the U.S.-Taiwan Expedited Double-Tax Relief Act and discussing Taiwan-U.S. security cooperation, drones, and ways to boost bilateral investment and trade. Semiconductor Supply Chain: Susquehanna and Bank of America lifted their TSMC price targets to $575 and $590 respectively, citing AI-driven demand and TSMC’s “unassailable” advanced manufacturing position. Advanced Packaging Push: TSMC and Amkor signed a 10-year Arizona partnership to expand advanced semiconductor packaging and testing, aiming to speed time-to-market for HPC and AI customers. AI Investment Outlook: Standard Chartered said technology could drive nearly 80% of Asia ex-Japan corporate earnings growth in 2026, with South Korea and Taiwan leading the expansion. Regional Tech Infrastructure: Japan will launch eight Indo-Pacific communications infrastructure projects, including undersea cables and satellite links, as part of economic security efforts. Education & Workforce: Taiwan’s vocational student share fell to 49.17% last year, raising concerns that technical training pipelines may shrink even as industry reports labor shortages. Business-Climate Signals: Taiwan’s top 5,000 firms posted record 2025 profits, with TSMC remaining the most profitable. Consumer Tech Pressure: Apple raised MacBook and iPad prices amid a memory chip shortage, adding to Asia’s tech sentiment jitters.

Taiwan-U.S. Security & Economy: Legislative Speaker Han Kuo-yu met U.S. House Speaker Mike Johnson in Washington, pressing for continued congressional support for Taiwan and urging passage of a double-tax relief bill to ease cross-strait business frictions. Taiwan’s AI Boom in Numbers: Taiwan’s top 5,000 firms posted record 2025 net profit, up 11% to NT$5.77T, with TSMC the most profitable—another sign AI demand is still driving corporate earnings. Semiconductor & Tech Policy Pressure: Apple is reportedly seeking White House approval to buy memory chips from China’s CXMT, highlighting how U.S. export curbs are reshaping global supply chains and margins. AI Rally Risk Watch: Jefferies warns the AI trade may stall not from chip shortages but from investors questioning ROI and funding, as cheaper Chinese models intensify competition. Foxconn Expansion: Foxconn Singapore approved a $37.2M investment in its India unit, reinforcing the group’s manufacturing push beyond Taiwan and China. Regional Security Context: Taiwan’s Han also discussed drone industry development and security cooperation with U.S. officials during the trip. Health/Regulatory (Global): The European Commission approved Maviret for acute hepatitis C, enabling earlier treatment after diagnosis. Weather Disruption: Typhoon Mekkhala brought heavy rain and flight disruptions across Taiwan and Japan, adding near-term operational risk for travel and logistics.

Cross-Strait Defense Signals: The U.S. says arms sales to Taiwan won’t be tied to US-China temperature, a shift that could reshape how partners plan their own defense procurement. Markets & Chips: Tech stocks stayed under pressure as investors worried about AI infrastructure spending; Taiwan’s TAIEX slid 3.64% after Apple and Microsoft price hikes sparked fears for demand, dragging chip and electronics names. AI Hardware Compliance: NVIDIA CEO Jensen Huang warned that building AI data centers with smuggled chips is a “dead end,” underscoring tighter enforcement around export controls. Cybersecurity: A new SharkLoader campaign is deploying Cobalt Strike via StrikeShark, targeting government and software orgs including Taiwan-linked victims. Energy & Shipping Risk: With Hormuz tensions still roiling, UN escort plans were paused after an attack; Taiwan-linked Evergreen said its ship was hit near Oman but the crew and cargo were safe. Taiwan Business & Industry: TM Technology unveiled its first humanoid robot, signaling Taiwan’s push to turn AI into embodied systems for factories and warehouses. Policy & Society: Taiwan’s Indigenous Peoples Cultural Foundation urged deeper exchanges between Lanyu and the Philippines’ Batanes to preserve Austronesian culture.

Taiwan Economy Watch: Taiwan’s economy kept strong momentum for a sixth straight month in May, with the NDC’s composite “red light” index still signaling overheating risk even as the score eased slightly, pointing to steady global AI-driven demand. Tech & Markets: A sharp tech sell-off hit Asia after Apple raised prices on MacBooks and iPads, dragging chip and AI sentiment; Taiwan’s Taiex fell 3.6% and TSMC-linked weakness weighed on the broader market. Cybersecurity & Supply Chain: Apple supplier Tata Electronics tightened access to sensitive systems after a dark-web leak claim involving thousands of client files, with Reuters reporting the exposed set also included purported documents tied to TSMC and Qualcomm. Cross-Strait Business & Mobility: Cross-strait ferry traffic on the Xiamen–Kinmen route topped one million passenger trips this year, boosted by frequent sailings and faster clearance. Semiconductor Investment: Foxconn’s Singapore unit approved a $37.2 million capital increase in its India subsidiary to expand long-term manufacturing capacity. Shipping Risk in Hormuz: Evergreen Marine said its Ever Lovely ship suffered minor damage from an unknown projectile in the Strait of Hormuz; Iran also reiterated it wants control over transit routes, keeping trade-route uncertainty high. Local Infrastructure: New Taipei’s Sanying MRT Line enters trial operations June 30, with free rides for stored-value card users through Aug. 31. Food & Regulation: Taiwan tightened rules on “fresh milk” naming in Chinese, limiting the term to certified domestic products from July 1. Weather Disruption: Typhoon Mekkhala and another storm threat forced evacuations and transport shutdowns in Japan, while torrential rain also battered Taiwan and triggered widespread flooding.

Typhoon Disruption: Torrential rain from Typhoon Mekkhala shut down parts of southern Taiwan, forcing closures for more than 5 million people and flooding a section of the main north-south rail line, while nearly 200 residents in Hualien were evacuated due to a rapidly filling barrier lake. AI Hardware & Consumer Tech: Apple raised prices on several Mac and iPad models (by $100–$300) citing soaring memory costs tied to AI demand, sending its shares down sharply; the move highlights how AI-driven component inflation is squeezing device makers. Semiconductor & Compute Infrastructure: IBM unveiled a path to sub-1-nanometer chip tech, claiming 50% better performance with far lower power, as the industry races to feed AI workloads; meanwhile, Netris secured a $15M Series A led by a16z to automate AI network infrastructure. Defense & Unmanned Systems: Taiwan’s “robodogs” signal a shift toward unmanned reconnaissance for contested maritime areas, reflecting broader regional moves to reduce manpower and boost persistent presence. Cross-Strait Maritime Pressure: China reiterated its intent to exercise jurisdiction in waters east of Taiwan, while Taiwan and allies warned of escalating maritime coercion tactics. Business & Trade: Taiwan’s “Go Healthy with Taiwan” drew strong Malaysian medical interest amid rising diabetes prevalence; and Costco listed a new South Kaohsiung opening for July, underscoring continued retail expansion. Markets: U.S. stocks ended mixed as tech sold off, with Apple’s slide a key drag.

Cross-strait diplomacy: China told the UK, Germany and France to stop “misrepresenting” Taiwan-related patrols, while the US says China is pressuring states and businesses to avoid engagement with Taiwan. Defense & industry: Taiwan’s first indigenous submarine Narwhal remains on track for delivery in 2H26 despite political pressure; meanwhile, Reuters reports US defense firm Anduril is in talks to buy Nissan’s Oppama plant in Japan to expand drone production. AI & semiconductors: IBM says it has sub-1 nanometer chip tech; OpenAI unveiled its custom “Jalapeño” AI chip with Broadcom; Taiwan’s Andes Technology said cumulative shipments of AndesCore-powered SoCs topped 20 billion. Markets & competitiveness: IMD’s 2026 World Competitiveness Ranking puts Singapore first, with Taiwan up to 4th; Taiwan business sentiment rose across major sectors in May. Trade & business links: Taiwanese Irwin mangoes entered the UK via a Taiwanese-run supermarket; South Korea welcomed 10M+ foreign visitors this year, with Taiwan arrivals at 190,000 in May. Security: Kaspersky flagged a StrikeShark malware campaign using fake Cisco AnyConnect and Google Update installers to deploy SharkLoader.