Asia·Silicon Valley – Don’t Forget the Dot!

NEW OFFICE — Vice President Chen Chien-jen attended the Opening Ceremony of the Asia·Silicon Valley Development Agency (ASVDA) in December last year. Photo Courtesy of Office of the President.

Innovation is high on Taiwan’s agenda, and the Asia·Silicon Valley segment of the 5+2 Innovative Industries plan promises to launch Taiwan into the innovation value ecosystem, says National Development Council (NDC) Deputy Minister Kung Ming-hsin. Innovative technologies and business models are transforming global business, Kung says, and “if Taiwan is not included in that trend, it will be very difficult to catch up.”

The Asia·Silicon Valley program aims to foster development of startups as well as Internet of Things (IoT) technologies on the premise that startups stimulate innovation, and that the IoT sector promises tremendous growth opportunities.

“The major objective is to foster an innovation and entrepreneurship ecosystem particularly related to IoT,” says Wang Ting-an, deputy CEO of the Asia·Silicon Valley Development Agency (ASVDA) and counselor to the Ministry of Science and Technology. The program is a key feature of the 5+2 plan, and is one of the few elements that has gained political support from both sides of the aisle.

“Taiwan is good at high tech, and we already have a number of technology science parks, so we should have a good chance of making Taiwan a platform for bringing Asian technology to Silicon Valley,” says Chu-chia “Steve” Lin, economics professor at National Chengchi University and researcher with the KMT-affiliated National Policy Foundation.

The name for the program was originally “Asian Silicon Valley,” but later a dot was inserted to make it “Asia·Silicon Valley. The dot is meant to signify that Taiwan is not aiming to recreate Silicon Valley in Taiwan, but instead to indicate that “Taiwan wants to be the dot – the hub – between Silicon Valley and Asia,” says Stephen Su, general director of the Industrial Economics Knowledge Center (IEK) at the Industrial Technology Research Institute (ITRI).

Through the Asia·Silicon Valley initiative, the government is seeking to create an ecosystem enabling startups to get funding, amend outdated laws and regulations that have stymied growth, and increase the talent supply. Specific goals include increasing Taiwan’s share of the global IoT market from 3.8% in 2015 to 5% – out of the US$4 trillion to $11 trillion projected by research firm Gartner Inc. – by 2025.

The program also seeks to encourage the formation of 100 successful IoT-related enterprises, either local startups or R&D centers set up by large corporations. Further, it aims to develop three global systems integrators in Taiwan, successfully attract investments from two world-class companies, and create one online IoT-related learning platform.

The government recognizes that talent is a necessary ingredient to achieve these objectives. Some 50% of startups in Silicon Valley are created by immigrants, but Taiwan’s labor pool is heavily domestic. To expand talent resources, the Executive Yuan has drafted a Foreign Talent Act that will dramatically liberalize Taiwan’s immigration rules for foreigners with desired talents. The country has also created the Taiwan Entrepreneur Visa, modeled on a similar program in Singapore, and has established programs for talent connections with Silicon Valley.

Since access to capital for business expansion is also a perennial challenge for Taiwan’s startups, the Industrial Innovation and Transformation Fund will make NT$100 billion available through the National Development Fund, while the National Investment Co. will provide a further NT$10 billion and the Angel Investor Program another NT$1 billion. A Fund for Startups, founded by the Taiwan Stock Exchange, will offer yet another NT$270 million.

Deputy Minister Kung also stresses the importance for the plan of significant regulatory reform. “Even if we have the right approach but the laws and regulations are not reformed, there’s no way that we can accomplish what we need to do,” he says.

ASVDA was launched on December 25, 2016 to assist companies and integrate resources to promote IoT and startups. Shortly afterward, the ASVDA Bay Area Office was opened in California to tap into networks of industries, universities, and research institutes internationally.

The program has already fulfilled one its main goals – attracting at least two international companies to open up IoT research centers in Taiwan. Microsoft and Qualcomm have both launched such facilities. In addition, more than 140 companies and organizations have joined an Asia·Silicon Valley IoT Alliance. Members include Acer, MediaTek, Advantech, Cisco, Microsoft, and IBM.

Despite the enthusiasm surrounding the program, however, many questions remain. Can Taiwan attract sufficient foreign talent to stimulate the generation of startups? Will Taiwan’s relationship to IoT “value chains” simply be more contract manufacturing of IoT-enabled components? And will Taiwan embrace innovation’s flipside, disruption? The recent controversy in Taiwan surrounding Uber suggests that this process may be painful.