SEMICON Taiwan 2026 Underscores Taiwan’s Indispensable Role in U.S.-Led Pax Silica and Trusted AI Supply Chains
Held in Taipei from September 2–4, SEMICON Taiwan 2026 underscored Taiwan’s growing role in the U.S.-led Pax Silica framework, while highlighting its central role in the global AI and semiconductor ecosystem and its indispensable strategic value to trusted technology supply chains and economic security.
U.S. officials used the event to emphasize deepening U.S.-Taiwan cooperation under Pax Silica, a U.S.-led initiative to build a secure and resilient technology ecosystem spanning critical minerals, energy, semiconductors, and AI infrastructure. Taiwan endorsed the Pax Silica principles through a January 2026 U.S.-Taiwan joint statement.
Record Scale
Held at a record scale, the three-day exhibition brought together more than 1,300 exhibitors and 4,300 booths, drawing more than 130,000 industry professionals from 65 countries.
A major shift this year was the growing participation of cloud service providers and data-center companies, reflecting the semiconductor industry’s expanding role in the broader AI infrastructure ecosystem.
Technology giants such as Google, Microsoft, NVIDIA, AMD, MediaTek, and Foxconn took part alongside chipmakers and suppliers, with the exhibition showcasing technologies ranging from advanced AI chips and packaging to silicon photonics, quantum technology, smart wafer manufacturing, and physical AI applications such as smart robots and drones.
Taiwan’s Growing Role in the AI Ecosystem and U.S.-Led Pax Silica
Taiwan’s semiconductor industry revenue is projected to approach US$300 billion this year, up more than 40 percent, driven by surging demand for AI technology, Taiwan Semiconductor Industry Association President Wu Chih-i said.
In prerecorded remarks, U.S. Undersecretary of State for Economic Affairs Jacob Helberg said that Taiwan has been at the center of the semiconductor industry for decades and is investing in the U.S. to expand its manufacturing base. He described the United States and Taiwan as “partners in securing the technology that will shape the rest of this century.” While noting that “concentration without resilience is a vulnerability,” he highlighted Pax Silica as a framework for trusted technology cooperation.
At a SEMICON Taiwan side conference, AIT Acting Deputy Director Eric Frater reaffirmed that Taiwan sits at “the very heart of the technology ecosystem” amid deepening bilateral cooperation under Pax Silica. He also highlighted growing Taiwanese investment in the U.S., noting that at May’s SelectUSA Summit, Taiwan’s Minister of Economic Affairs said about 20 Taiwanese tech firms planned roughly US$35 billion in new U.S. investments, primarily in the semiconductor and AI server sectors.
Implications
SEMICON Taiwan 2026 illustrates how the U.S.-Taiwan technology relationship is evolving beyond commercial interdependence into an increasingly strategic partnership centered on AI, economic security, and trusted supply chains. Taiwan’s endorsement of the Pax Silica principles, combined with growing bilateral investment and technology cooperation, is embedding Taiwan more firmly within U.S.-led trusted networks.
Expanding Taiwan’s participation in international economic, standard-setting, and technology-security initiatives would strengthen not only Taiwan’s democratic resilience and international standing, but also the long-term technological competitiveness and economic security of the United States and its allies.
Sources:
[1] Taipei Times [2] American Institute in Taiwan (AIT) [3] U.S. Department of State [4] Focus Taiwan [5] Focus Taiwan [6] Taipei Times
Taiwan Pushes US$4.59 Billion Supplementary Defense Budget as U.S.–Taiwan Drone Cooperation Deepens
On September 3, Taiwan’s Cabinet approved a NT$607.6 billion (US$19.12 billion) supplementary budget proposal for submission to the Legislative Yuan, including NT$145.7 billion (US$4.59 billion) in additional defense spending. Much of the defense funding is aimed at restoring or accelerating capabilities excluded from an earlier special defense package. The funding covers drones, new surface-to-air defense systems, munitions, and other capabilities to accelerate Taiwan’s military buildup amid escalating Chinese coercion.
Of the supplementary defense request, NT$55.9 billion (US$1.76 billion) is earmarked for three categories of uncrewed systems requested by the Ministry of National Defense (MND). The MND said that this allocation combines NT$13.8 billion in delayed 2026 requirements with NT$42.1 billion planned for 2027. Target deliveries for 2027 include more than 40,000 coastal attack drones, over 600 coastal reconnaissance drones, and an initial batch of over 100 small one-way strike unmanned surface vessels (USVs).
Filling Gaps Left by Legislative Cuts
The Cabinet’s proposal follows the Legislative Yuan’s passage of the opposition-backed Act on Strengthening Defense Autonomy and Developing the Unmanned Vehicles Industry. The Act calls for NT$40 billion (US$1.26 billion) to be budgeted annually, in principle, for six consecutive years through the general budget, while allowing additional funding subject to legislative approval. The legislation includes the same three categories of uncrewed systems among a broader set of defense-procurement and industry-development measures.
MND Strategic Planning Department Director Lt. Gen. Huang Wen-chi said the supplementary budget reflects the military’s force-buildup schedule after lawmakers cut NT$470 billion (US$14.79 billion) from the Cabinet’s proposed NT$1.25 trillion (US$39.34 billion) special defense package in May.
The Cabinet’s latest supplementary proposal also includes funding for indigenous Albatross II intelligence, surveillance, and reconnaissance (ISR) drones and the Chiang-Kong mid-altitude anti-tactical ballistic missile system, as well as NT$7.3 billion (US$230 million) for “urgent munitions stockpiles” and NT$900 million (US$28 million) for the Taiwan Tactical Network, a system aimed at improving the situational awareness of frontline troops.
Another NT$64.5 billion (US$2.03 billion) is allocated to two classified projects believed to involve funding previously removed by the Legislature for Taiwan-U.S. co-development programs.
U.S.–Taiwan Drone Supply Chains Deepen
The proposal comes as U.S. defense technology companies deepen their ties with Taiwan’s autonomous-systems industry. At a SEMICON Taiwan forum, a Shield AI representative said Taiwan’s share of the materials and components used in the company’s aircraft had increased from less than 1 percent in 2024 to 16 percent and could soon reach 25 percent. Shield AI has also integrated its Hivemind autonomous-piloting software with Taiwanese platforms.
Meanwhile, U.S. defense contractor AeroVironment said it has sourced more than US$20 million in panels, sensors, batteries, and other components from Taiwan over the past three years. The company is working with Taiwanese partners on its Switchblade 300 loitering munition and is seeking to develop and manufacture additional systems in Taiwan.
Implications
Taiwan’s advanced manufacturing capacity, combined with growing cooperation with U.S. partners, is positioning the country as an increasingly important part of trusted, non-PRC drone supply chains—an especially critical role given China’s dominant position in the global commercial-drone ecosystem and in key upstream inputs.
To translate that opportunity into a resilient defense-industrial base and strengthen deterrence across the Indo-Pacific, Taiwan will also need greater component standardization, interoperability with U.S. and allied systems, and deeper non-PRC sourcing for batteries, permanent magnets, and rare-earth materials.
Sources:
[1] Focus Taiwan [2] Military News Agency [3] Focus Taiwan [4] Taipei Times
