Taiwan Draws Up Plan to Woo $1.3 Billion of Annual Tech Research

(Bloomberg) -- Taiwan is dangling incentives to attract more than NT$40 billion ($1.3 billion) of annual investments in research and technology, creating a seven-year blueprint to safeguard the island's lead in semiconductors and other cutting-edge fields.

As part of the initiative, the cabinet plans to allocate more than NT$10 billion to entice foreign chipmakers to set up R&D facilities locally, confirming an earlier Bloomberg News report. The government said Thursday it aims to subsidize as much as half of all research and development costs incurred by global chip companies that build centers on the island.

The endeavor escalates global competition for much-sought-after semiconductor technology and is intended to build on the island's technology industry, led by major players such as key Apple Inc. suppliers Taiwan Semiconductor Manufacturing Co. and Hon Hai Precision Industry Co. Taiwan has been caught in the middle of a clash between the U.S. and China over the development of chip technology that powers everything from smartphones to 5G base stations.

Last month, the Trump administration barred any chipmaker using American equipment from supplying China's Huawei Technologies Co. without approval, dealing a major blow to TSMC -- the world's largest contract chipmaker -- and its peers.

Taiwan President Tsai Ing-wen has pledged to transform Taiwan into an R&D hub for emerging technologies. Her government is now pursuing more foreign tech investments from multinationals seeking to shift out of China over concerns about the intensifying U.S.-China trade war and their desire to reduce dependency on the world's second-largest economy.

The incentive program is mainly targeted at makers of memory chips, though part of it will also be used to attract global 5G and artificial intelligence technology companies.