Taiwan’s Technology Sector Overcomes Challenges With AI

In Taiwan, local technology companies, which are currently the world’s largest suppliers of hardware for personal computers and smartphones, demonstrate an optimistic attitude, even though the current configuration of reality in the geopolitical plane is not a kind of platform for positive prospects and not a certain set of facts and circumstances testifying in favor of an unambiguously favorable formation of the future.

Taiwan's Technology Sector Overcomes Challenges With AI

For many years, the mentioned firms have been exposed to what can be called an increased international risk, which for Taipei is more in the form of a potential probability. The materialization of an extremely negative scenario in this case has not yet become an objective reality, but its transition from the theoretical space to the plane of obvious circumstances does not belong to the category of impossible or fantastic in the short, middle, and long term. The situation of Taipei, including in the economic context and terms of technological development conditions, is largely affected by the level of relations between Beijing and Washington. Currently, the condition of interaction between the United States and China is on a trajectory of rapid and steady deterioration. At the same time, nowadays Taiwanese companies demonstrate an optimistic attitude that is largely dissonant with the present configuration of geopolitical reality, which contains the potential to become what can be described as a factor in the formation of terms of existence.

The high-probable exacerbation trade war between Washington and Beijing could become a scenario for Taipei that implies significant costs. Also in this case, the source of tension, especially in the context of the prospects of the future, is the aggravation of political problems on both sides of the Taiwan Strait.

Geopolitical issues have not yet been resolved and there are currently no signs that things will improve in the short term, but the growth of global consumer interest in personal computers with artificial intelligence has become a factor in a very positive impact on Taiwan’s $130 billion technology supply chain. The beneficiaries of the mentioned tendency are both computer developers and manufacturers of small parts, including chips and fans.

Representatives of Taiwan’s technology sector say that this island has a complete suite of components and equipment that is necessary for making devices with artificial intelligence. They also note the willingness of the mentioned technology supply chain to respond to the widespread consumer demand observed at the global level.

James Hsieh, assistant vice-president of AcBel Polytech, says that the so-called artificial intelligence boom is still ongoing, which has an impact on the activity of manufacturers of personal computers with AI. It is worth noting that in the short term, the mentioned tendency is likely to continue. Currently, there are no signals or reasons for the popularity of artificial intelligence to be on a downward trajectory. A kind of consensus opinion has already formed in the expert community that AI will become the main driving force of the global progress of human civilization at the current stage of its existence. Artificial intelligence is highly likely to turn out to be a kind of link that forms the space of transition from the present to the future, characterized by a higher level of technological development. For this reason, the demand for AI is not likely to fall in the foreseeable future.

The mentioned AcBel Polytech specializes in the implementation of activities for the production of power supplies. The company’s product list includes a 300-watt model, which, according to James Hsieh, does an excellent handle with increased power for computing using artificial intelligence. Such power supplies are necessary to ensure the functioning of machine intelligence systems. James Hsieh talks about the need to conduct some marketing research, without which AcBel Polytech products will become obsolete.

The Ministry of Finance in Taipei has released data according to which Taiwanese exports for January-April of the current year showed an increase of 10.6% compared to the result for the same period in 2023. In this case, the strongest positive dynamic was recorded in the high-tech hardware manufacturing sector.

It is worth noting that for most of last year, the mentioned ministry published monthly data indicating a drop in the value of exports. This tendency was formed against the background of a decrease in consumer demand for personal computers and smartphones after the end of the coronavirus pandemic.

For about 50 years, Taiwan has been the main supplier of technological hardware worldwide. The island has become what can be broadly described as a popular manufacturing site for making devices and parts. The corresponding products are usually developed in Silicon Valley, located on the territory of the US state of California.

Taiwan’s gross domestic product (GDP) in the first quarter of 2024 showed a growth of 6.51% compared to the result for the same period last year. This indicator is largely due to the dynamic of net exports. The corresponding comment is contained in the ING analytical note, which was made public in April. Also, GDP growth exceeded preliminary expectations for the rate of increase of this indicator.

Taiwan is a supplier of processors, including many ones for artificial intelligence configurations, and power-saving items called neural processing units, or NPUs. Taiwan Semiconductor Manufacturing Company (TSMC) is currently the world’s largest contract producer of microcircuits. This firm accepts orders for processors, often developed by US brands such as Intel.

Sanesha Huang, an analyst with the Taipei-based market research company TrendForce, says that semiconductor manufacturers, including TSMC, are definitely the most critical suppliers of advanced chips that are used in computers with artificial intelligence.

Developers of cooling systems, power supplies, connectors, and chassis for personal computers are currently studying how they should adapt to PCs optimized by applying machine intelligence.

James Hsieh says that more power is needed for the mentioned artificial intelligence devices. The corresponding personal computers have processors that need enhanced cooling and additional memory. James Hsieh also suggested that it would probably be necessary to redesign the PC chassis with artificial intelligence, focusing on accommodating changes on the inside.

Sanesha Huang says that the production of hardware components, including motherboards, graphics cards, and memory modules, is one of Taiwan’s strengths. In this context, the expert separately noted the extensive capabilities of the island in the area of assembly and making of electronic devices.

In the current month, at the annual Computex Taipei trade show, there was what can be described as euphoria about personal computers with artificial intelligence. Crowds of people attended product presentations by PC developers such as Acer, Asustek, and MSI. The mentioned companies said that mass sales of their new products will begin between the end of June and the end of 2024.

In the demo videos at the specified trade show, computer keys that launch GPT programs in a single stroke were demonstrated. Moreover, an artificial intelligence-based software was presented that can generate images that have what can be described as a kind of photographic realism. The AI performs the corresponding tasks based on user commands. Also at the trade show, devices equipped with augmented reality functions and devices with such a competitive advantage as autonomous operation for 18 hours were demonstrated to the public.

Nvidia chief executive officer Jensen Huang, who is a native of Taiwan, spoke at Computex. It is worth noting that the mentioned company is the main global developer of graphics processing units (GPUs), necessary for the training and subsequent operation of artificial intelligence systems. Nvidia also turned out to be one of the beneficiaries of the AI boom, as evidenced by the fact that last week the market value of the firm exceeded the historical mark of $3 trillion.

At Computex, Jensen Huang announced a new artificial intelligence platform called Rubin, which is scheduled to debut in 2026. He also stated that his company intends to update its artificial intelligence accelerators annually. Moreover, Jensen Huang announced the debut of a new chip called Blackwell Ultra next year.

The statements of the head of Nvidia have strengthened confidence in the successful future of artificial intelligence. Jensen Huang also signed autographs for those who admire the achievements of the mentioned company.

Besides, Nvidia’s CEO stated that the firm will use its architecture to build so-called artificial intelligence factories, which will be designed to develop breakthrough solutions in the area of generative artificial intelligence.

Currently, Microsoft is another significant and active player in the AI industry. This technology giant has developed software with a digital assistant Copilot+, which is designed for computers with artificial intelligence. Microsoft expects 50 million of these devices to be bought through May next year. Mario Morales, group vice president for semiconductor research with market analysis firm IDC, says that to achieve the specified goal, Taiwanese suppliers will begin implementing a scaling strategy.

Jerry Kao, Acer’s chief operating officer, says that against the background of the current popularity of artificial intelligence, the maximum probability is that over the next few years, consumer demand for personal computers with AI will be at a high level. The mentioned company currently ranks fifth in the world among PC vendors in terms of sales of corresponding products. Jerry Kao says that Acer expects its Swift 14 laptops, which were integrated with artificial intelligence technology, to be released in the current month or in July with Copilot+.

On the sidelines of Computex, the mentioned company’s COO said that after the end of the coronavirus pandemic, significant doubts were formed about the prospects of the personal computer market. The integration of artificial intelligence into appropriate devices has changed the vision of the future of the PC area. According to Jerry Kao, the deployment of AI into personal computers generates favorable prospects for the market of these products.

Currently, the staff of Guanghsing Industrial, consisting of 70 people, is studying which technological solutions will be able to provide cooling of artificial intelligence processors in larger computers designed for use in data centers. This was stated at Computex by the mentioned firm’s manager Gary Hsu, noting that AI needs a refrigerator. Guanghsing Industrial is one of dozens of small Taiwanese companies specializing in the implementation of hardware manufacturing activities. These firms have been operating for several decades.

Angela Huang, an analyst with the Taipei-based Market Intelligence & Consulting Institute, says that battery cells, which are supplied mainly by Japanese manufacturers, are almost the only components that are hard to obtain in the Taiwanese supply chain.

Taiwan continues to be under pressure from circumstances related to the geopolitical shifts that took shape in 2018 against the background of the trade war declared by former President of the United States Donald Trump to China.

The current US laws prohibit companies that are based on a specified island and manufacture high-tech products such as chips from supplying relevant goods to mainland China. These rules apply to the maximum extent to firms that sell microcircuits to customers located in the United States. Some companies, such as TSMC, as part of a preventive response, have diversified production facilities away from Taiwan to discourage risks associated with a potential armed conflict with mainland China. If this scenario is implemented, the mentioned firms’ foreign customers may face problems accessing products.

Albert Liu, CEO of Kneron, a startup specializing in the development of artificial intelligence chips, said Taiwan has increased sensitivity to geopolitical problems. This brand designs microcircuits of AI that save power. Last week, Kneron presented the KNEO 330, its second-generation edge GPT server. The startup also presented its newest KL830 processor chip, which is designed for use in personal computers. This microcircuit will run AI apps without connecting a PC to the Internet.

It is worth noting that the current configuration of geopolitical reality is not the most negative for Taiwan, although it generates significant difficulties related to the category of sensitive pressure factors. Whether artificial intelligence can become a kind of source of salvation for Taipei in an economic and technological sense, if relations between Beijing and Washington deteriorate to a critical point, after which the most intense confrontation begins, not necessarily expressed in the form of hostilities, is still unknown.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.