As it seeks to become an AI powerhouse, Taiwan is moving quickly to turn its semiconductor advantage into a broader strategic position, but its push for innovation is still outpacing the guardrails needed to govern the technology safely.
As a semiconductor leader, Taiwan has quickly emerged as a key actor in AI development. President Lai Ching-te (賴清德) has moved quickly to turn this hardware advantage into a broader strategic ambition.
AI has been elevated to the rank of one of Taiwan’s Five Trusted Industry Sectors, alongside semiconductors, and the “Ten AI Initiatives Promotion Plan” was launched this year with the aim of generating NT$15 trillion (US$474.9 billion) in output, creating 500,000 high-paying jobs, and establishing Taiwan as a global AI leader by 2040.
AI is also becoming increasingly important to Taiwan’s military transformation. The Ministry of National Defense established an Artificial Intelligence Office in late 2025 to explore AI-related military applications, while AI is also a critical part of the proposed T-Dome architecture.
In that sense, AI has become a growing deterrent tool for Taiwan, evolving into something like what the semiconductor industry has long represented: a structural advantage so deeply embedded in global supply chains that it confers a degree of protection.
To govern such a transformative technology, tailored governance and safety regulations are needed. Taiwan’s AI Basic Act came into effect in January 2026 and promotes principles such as transparency, accountability, and safety with the aim of balancing innovation with the protection of people’s rights.
Yet because the law is anchored in a non-binding approach, its enforcement power remains weak in its current form, raising questions about how Taiwan plans to pursue innovation while protecting the public from AI-related risks.
Innovation first, governance later
For Taiwan, adopting AI offers more than economic benefits. It represents a new opportunity to further embed the country in global supply chains while increasing its deterrent power both economically and militarily.
This is the core tension — finding common ground between innovation and governance is not easy, and the government has, for now, prioritized innovation over binding regulation.
Indeed, the Basic Act imposes no direct obligations on the private sector, and enforcement still depends largely on violations of non-AI laws.
Article 11 goes further, stating that where AI regulatory regimes conflict with existing laws, fostering new technologies and applications will take priority. Equally important, Article 17 exempts developers from liability for high-risk applications during the research and development phase.
Civil society actors have already raised concerns, pointing to the lack of concrete governance measures and enforceable rights and responsibilities.
At the same time, the act pays particular attention to what the Ministry of Digital Affairs and other government agencies classify as high-risk AI — systems that disrupt social order, threaten national security or environmental sustainability, or spread misinformation and bias — which could later trigger accountability, monitoring, compensation, and ban measures.
The act also adopts a definition of AI that closely aligns with the EU AI Act. This reflects Taiwan’s broader effort to integrate into the global AI ecosystem through interoperability and shared standards.
In parallel, legislation related to data governance and open data promotion is being reviewed to support AI development while strengthening personal data protection.
The Basic Act’s most significant governance commitment appears in Article 18, which requires the government within 24 months to review, adopt, or revise the laws, regulations, and administrative measures needed for implementation. In addition, risk-management measures are due within four months, and internal government AI control mechanisms within 10 months.
Taiwan has decided to remain flexible and agile in how it handles AI governance — a calculation that is understandable, but one that could carry real risks.
The potential costs of moving fast
Consider the military dimension first. The T-Dome’s planned sensor-to-shooter architecture is designed to compress the time between detection and interception. Embedding AI within that architecture could significantly strengthen the kill chain, enabling faster and more precise responses to China’s missile and drone threats.
Yet building such a system without binding governance standards carries its own risks. Without mandatory testing protocols, audit mechanisms, or clear accountability frameworks, Taiwan could find itself deploying an AI-enhanced defense architecture that has never been adequately stress-tested against edge cases. A failure at the wrong moment could prove as damaging as the threat it was designed to counter.
The Basic Act, as currently structured, is still more focused on industry innovation than national security.
Beyond defense, Taiwan currently has no dedicated body specifically mandated to evaluate AI safety risks. The National Science and Technology Council has been designated as the central competent authority under the Basic Act, but it is not, in itself, an AI safety evaluation institution.
As AI systems are deployed across defense, infrastructure, and public services, the absence of an independent body capable of assessing and flagging risks before deployment carries serious consequences.
Finally, the act establishes no clear connection to Taiwan’s existing cybersecurity legal framework. The Cyber Security Management Act already governs security requirements for critical infrastructure, yet the Basic Act makes no clear reference to how AI systems deployed in those environments must comply with it.
As AI becomes embedded in sectors ranging from energy grids to financial networks, the lack of explicit legal bridges between the two frameworks creates a governance gap.
Taken together, these gaps point to a common problem: Taiwan is building AI capabilities at a pace its governance framework has yet to match. The 24-month implementation window provides an opportunity to address this, but only if the urgency applied to AI development is matched by urgency in building the regulations needed to govern it.
Innovation and accountability are two sides of the same strategy
AI regulation is likely to remain loose in Taiwan for the foreseeable future, as the country seeks to use its competitive edge to embed itself more deeply in the international AI ecosystem.
As national security remains inseparable from Taiwan’s ability to strengthen its position in global supply chains, innovation will likely continue to take precedence over binding governance.
Taiwan’s participation as a non-signatory participant in Pax Silica — the US-led initiative on AI and supply chain security — further reinforces this trajectory, deepening Taiwan’s integration into a wider technology ecosystem and cementing its role as a major hub in the global AI architecture.
As this pursuit of innovation continues, broader engagement with Taiwan’s civil society in the policymaking process will become increasingly necessary.
Taiwan’s democracy and human rights-focused approach remain among its most distinctive assets, and ensuring that those values are embedded in whatever governance framework eventually takes shape is essential.
For a country whose survival depends in part on being indispensable, AI governance should not be viewed as a constraint on national security, but rather as part of what makes Taiwan’s model worth defending.
