Taiwan’s AI, Semiconductor Industries Face $609M Cut — How Will Nvidia Be Affected?

• Taiwan’s AI and semiconductor manufacturing funding is at risk of being cut in 2025, according to the science ministry.
• The cuts could total upwards of $609 million, which would heavily impact the output of key companies like Nvidia.
• If the funding cuts occur, the U.S. will likely attempt to take advantage.

Taiwan’s funding for semiconductors and AI could be cut by hundreds of millions of dollars in 2025 due to new laws passed by opposition parties, the country’s science ministry warned on Friday, Dec. 27.

Taiwan is a key hub for semiconductor manufacturers, with over 90% of the world’s advanced chips made on the island.

Major companies like Nvidia rely heavily on the country for its output, highlighting a risk to the world’s second-most valuable company’s supply chain if funding is pulled.

Taiwan AI and Chip Cuts

The cuts, which could total up to T$20 billion ($609.11 million), will redirect money from central government spending to local governments—something strongly contested by protestors and Taiwan’s current government, Reuters reported .

This development could shift the dynamics of the global AI race as global companies look for countries with robust and stable technology investments.

According to its calculations, the economic ministry’s spending in 2025 is projected to be reduced by around T$29.7 billion ($904 billion), which it warned could heavily affect the country’s collaboration with global tech companies.

Over the past few years, Taiwan’s government has collaborated with leading tech companies such as Nvidia, Microsoft, and Micron on AI research and development, spanning everything from healthcare to smart cities.

Taiwan’s Impact on Nvidia and Beyond

The impact of Taiwan’s budget cuts on Nvidia could be significant, as the country plays a pivotal role in the company’s success in the semiconductor and AI industries.

Nvidia relies heavily on Taiwan’s advanced semiconductor manufacturing capabilities, mainly through its partnership with Taiwan Semiconductor Manufacturing Company (TSMC).

TSMC produces Nvidia’s high-performance chips in facilities throughout Taiwan.

As the global AI race continues to heat up, Nvidia is increasingly operating in an industry where speed and efficiency are paramount.

A reduction in government funding could potentially slow advancements in the manufacturing processes, forcing Nvidia to seek alternative development hubs.

U.S. Could Take Advantage

Meanwhile, the U.S. has been looking to bolster its domestic chip manufacturing capabilities by signing deals with global semiconductor manufacturers.

On Dec. 10, the Department of Commerce approved a $6.1 billion subsidy to help Micron Technology construct semiconductor facilities nationwide.

If funding is cut across Taiwan’s industry, the U.S. could be primed to take some of its lost manufacturing power and sign more semiconductor deals on home soil.

The U.S. Chips and Science Act, set up by the Biden administration to boost domestic AI and semiconductor manufacturing, may lead companies like Nvidia to pivot more resources to U.S. operations.