Taiwan

Intelligence for Better Decision Making

Phoenix's Rise as a Technological Hub and the Global Semiconductor Shift

Jan. 22, 2025 | Indirect Indicator

Phoenix, Arizona has rapidly emerged as a pivotal center for semiconductor manufacturing and autonomous vehicle testing, drawing the attention of industry giants such as TSMC and Amazon.

The city's favorable business environment, including a robust industrial ecosystem, proximity to leading engineering universities, and access to a highly skilled workforce, makes it an ideal location for technological advancements. TSMC's ambitious $65 billion investment plan, which includes the creation of a new science and technology park, is projected to generate around 62,000 jobs in and around the region.

The city's infrastructure lends strong support to the advancement of technologies, especially in autonomous vehicles. Phoenix's urban design, coupled with its stable climate, makes it a prime site for self-driving car tests. Companies such as Uber, Cruise, and Waymo have taken advantage of these optimal conditions, with Waymo having offered a comprehensive robotaxi service since 2017. Moreover, Arizona's supportive regulatory environment further encourages the testing and deployment of autonomous technologies.

In a related vein, Amazon's Prime Air has been operational in a Phoenix suburb, making thousands of drone deliveries with an ambitious target of 500 million annually. This convergence of semiconductor manufacturing, autonomous vehicle testing, and drone delivery services underscores Phoenix's ascent as a significant technological hub.

On a global scale, the Biden administration's stringent chip control measures are reshaping the semiconductor industry, particularly impacting key players like TSMC. These measures necessitate US authorization for exporting semiconductor technologies at 14nm or 16nm or lower, posing potential challenges under a potential Trump administration. This regulatory framework categorizes countries into a "white list," "black list," and a second-level control list; the white list grants unrestricted access, while the black list significantly restricts nations like China, Russia, and Iran from obtaining advanced chips. Other countries must seek permission, indicating a shift toward a regulated market influenced by geopolitical dynamics.

These regulations notably affect AI chip manufacturers such as NVIDIA and AMD, as well as key chip producers like TSMC, Samsung, and Intel, by targeting the 16nm mature processes embedded in the semiconductor supply chain. Companies such as UMC and Groffang face constraints, prompting increased investment in China's maturing semiconductor processes as a response to US policy impacts on the sector.

Taiwan's Contentious Budget Cuts: Implications for Stability and Development

Jan. 22, 2025 | Indirect Indicator

In Kaohsiung City, Youth Director Zhang Yili has announced his candidacy for a city council seat in the Zuoying and Nanzi districts for the 2026 elections.

As part of his preparations, he intends to complete a budget review and will resign from his current role when he feels ready to transition. His immediate priority remains the effective management of the Youth Bureau's budget. However, during a recent budget review session, Zhang confirmed his political aspirations, acknowledging that a detailed campaign plan has yet to be formulated.

Meanwhile, Mayor Chen Qimai is publicly supporting DPP legislators Xu Zhijie and Huang Jie, defending them against criticism and removal efforts by certain citizen groups, with formal responses expected after the Lunar New Year. On a national level, the Legislative Yuan's approval of a general budget has become contentious, with Executive President Zhuo Rongtai voicing concerns over the drastic budget cuts imposed by the Kuomintang and the People's Party. Zhuo perceives these cuts as retaliatory, drastically reducing some ministry budgets to bare minimums, which he warns could threaten operations and national stability.

Zhuo emphasizes the potentially severe consequences of nearly 400 billion yuan cut from the budget, which could impact both industries and government functions. He calls for a reconsideration of budget cuts that jeopardize national development, emphasizing the importance of sustaining funding for cultural policies, anti-fraud endeavors, and essential subsidies. He argues that these budget reductions by the opposition could risk public welfare, cultural progress, and inadvertently support hostile interests.

One significant area of concern is the 100 billion yuan cut from Taipower's budget, which threatens the stability of the power supply and the company’s financial well-being. Taipower anticipates losses exceeding 420 billion yuan by 2024 due to rising global fuel prices. Financial pressures have already resulted in more frequent power outages, illustrating the potential negative outcomes of continued budget reductions.

Further proposed cuts pose threats to crucial ministries responsible for equipment certification, cybersecurity initiatives, and anti-phone scam strategies. There are also substantial worries about the freezing of funds allocated for indigenous submarine development, raising critical defense issues.

Executive President Zhuo underscores the necessity of sustaining key government functions and safeguarding national security, citing significant cuts in public services, cultural promotion, and disaster response. He cautions against isolating Taiwan from international collaboration and urges a comprehensive budget review that considers long-term impacts. Zhuo appeals to the opposition to adjust their proposals to better reflect public sentiment.

The budget review process in the Legislative Yuan has heightened tensions between the ruling and opposition parties. The Kuomintang has introduced significant budget cuts, critiquing government financial management and questioning the political affiliations of executives at the Executive Yuan Joint Service Center.

The debate also spans cuts to public television funding, scrutinizing its independence and content value, which mirrors a broader dissatisfaction with representation in media. The film and television industry fears these changes could endanger creative freedom and public media neutrality, calling for a reassessment of the budgetary decisions affecting multiple sectors.

Monitored Intelligence for Taiwan - Jan. 22, 2025

News
Media
616

Government
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35

City/State
Releases
80

Embassy
Releases
1

Foreign
Service
Advisories
0

Academic/
Think
Tank
5

Podcasts
0

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0

Social
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0

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5

Erudite Risk takes an all risks approach to intelligence reporting. We categorize key intelligence into one of 40 different risk intelligence categories.

The goal is to provide intelligence that allows decision makers to avoid being blindsided by what they may have missed, while informing them to make better decisions as well.

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美《中國軍力報告》關注中共長程投射能力及其挑戰

The U.S. “China Military Power Report” focuses on the CCP’s long-range projection capabilities and its challenges

Institute for National Defense and Security Research | Local Language | AcademicThink | Jan. 22, 2025 | Geopolitical Conflict and Disputes

The U.S. Department of Defense's December 2024 report on China's military power highlights significant advancements by the Chinese Communist Party (CCP) in long-range strike capabilities, despite facing internal economic challenges and corruption. The report indicates that the CCP is focused on modernizing its military and enhancing global power projection, with a growing arsenal of approximately 600 nuclear warheads projected to exceed 1,000 by 2030. This diversification of nuclear forces aims to boost military flexibility and effectiveness.

The People's Liberation Army Rocket Force (PLARF) is pivotal to these long-range capabilities, equipped with a variety of missile systems, including short-range and intercontinental ballistic missiles. The Dongfeng series features advanced hypersonic missiles and a new sub-orbital bombing system, showcasing China's ability to conduct precision strikes that can evade current missile defense systems, offering a strategic advantage in long-range military engagements.

Furthermore, the People's Liberation Army Air Force is evolving into a comprehensive strategic force, aiming to extend operational reach and enhance combat readiness through international joint exercises. With over 3,150 aircraft, including nuclear-capable bombers, China is advancing drone technology and next-generation fighters to bolster aerial and surface combat capabilities.

Despite these advancements, the CCP grapples with significant internal challenges, including corruption, which may hinder military modernization goals set for 2027, 2035, and 2049. Leadership disruptions within military and defense sectors raise concerns about the PLA's readiness and ability to meet its strategic objectives. Nonetheless, the PLA's increased long-range capabilities signal a clear intent to establish military dominance, escalating geopolitical tensions in the Indo-Pacific region and beyond.

S Korean central bank cuts forecast over political crisis

Taipei Times | English | News | Jan. 22, 2025 | Political Scandal or Corruption

South Korea's central bank has revised its 2023 growth forecast downward due to the political crisis following President Yoon Suk-yeol's recent declaration of martial law. This adjustment coincides with a $250 billion support package aimed at bolstering exporters amid concerns over potential tariffs from incoming US President Donald Trump. The Bank of Korea attributed the lowered forecasts to waning economic sentiment affected by both the political unrest and the Jeju Air passenger plane disaster.

The central bank expects declines in domestic consumption and construction investment will lead to a lower fourth-quarter growth rate, adjusting its forecast from 2.2 percent to between 2.0 and 2.1 percent. For the full year of 2023, the growth estimate has been revised from 1.9 percent to a range of 1.6 to 1.7 percent.

In response to these challenges, South Korea's Ministry of Finance announced a significant support package for exporters, providing substantial financing for major firms like Samsung Electronics and SK Hynix. The ministry has allocated 360 trillion won (approximately $248.1 billion) for export financing in 2023 to address uncertainties linked to the new US administration. Additionally, measures to reduce exchange rate volatility were introduced, as the South Korean won has weakened against the US dollar amid ongoing political instability. The government aims to foster growth in key industries while strengthening US-Korea export cooperation.

立院刪除千億補貼台電：財務狀況弱化衝擊穩定供電

Legislative Yuan deletes 100-billion yuan subsidy for Taipower: weakening financial situation affects stable power supply

Central News Agency | Local Language | News | Jan. 22, 2025 | Critical Infrastructure Failure

The Legislative Yuan has voted to cut a 100-billion-yuan budget allocation for Taipower, raising concerns about the company's financial stability and its ability to supply electricity reliably. Taipower warns that this decision will jeopardize affordable electricity prices for consumers and impede essential upgrades to its infrastructure. With rising external pressures on energy costs, Taipower intends to share financial data in upcoming electricity price reviews.

This budget reduction was approved by legislators from the Kuomintang and the People's Party during a recent meeting. Taipower has faced substantial electricity price increases, amounting to over 280 billion yuan from 2022 to 2024, and anticipates an accumulated loss exceeding 420 billion yuan by the end of 2024. The company attributes some of these challenges to increased fuel costs driven by the global ramifications of the Russia-Ukraine war, which has compelled many governments to subsidize electricity for consumers.

Taipower cautions that insufficient investment and maintenance of its infrastructure will compromise power supply stability. Previous financial difficulties forced the company to delay equipment replacements, causing a rise in power outages. Although it has made strides to reduce outages, the lack of financial support could reverse its progress. Ongoing financial losses will significantly impact future electricity consumption for the public.

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