Chia-Hsuan Wu, Deputy Director of the China Economic Research Institute at the Chung-Hua Institution for Economic Research (CIER), observed that Taiwan will face three major external challenges in 2026 amid the global reorganization of manufacturing value chains: “America First,” “China’s domestic substitution,” and “normalization of ECFA effects.” Industry and policy adjustments are urgently needed.
Deputy Director Chia-Hsuan Wu stated that the U.S. trade protectionism has continued to intensify, with supply chain localization trends becoming increasingly clear. Businesses face rising costs and pressure to choose sides. China’s supply chain is increasingly focused on self-sufficiency, negatively impacting Taiwan’s exports of intermediate goods as mature manufacturing processes and basic industries face heightened competitive pressure. Additionally, traditional industries must accelerate structural transformation as ECFA tariff preferences gradually diminish.
Regarding technology positioning, global demand for AI and HPC continues to expand. Co-packaged optics, silicon photonics, advanced packaging, and AI agents will drive a new wave of computing power, providing Taiwan with an important opportunity to advance from hardware advantages toward an AI ecosystem.
Meng-Chun Liu, Director of the China Economic Research Institute at the CIER, highlighted that the United States employs a “small yard and high fence” strategy to limit China’s access to advanced chips and equipment. In contrast, China is adopting a dual-track approach. This involves using legacy equipment, exploring alternative technologies, and investing in quantum computing to advance technology despite ongoing blockades.
Author: CIER Editorial Team
Date: December 8, 2025