As generative AI technologies scale up, the semiconductor industry is poised for a significant transition from copper-based interconnects to optical solutions to meet the stringent requirements of AI data centers. Nvidia has targeted 2026 as the initial commercial launch window for silicon photonics (SiPh) technology, signaling a strategic shift that will reverberate throughout global semiconductor supply chains. Taiwanese packaging and testing firms, among others, are positioning themselves to capitalize on the burgeoning market for ultra-high-bandwidth, energy-efficient AI infrastructure.
The global electronics manufacturing services (EMS) and original design manufacturing (ODM) sector posted significant revenue growth in 2025, fueled primarily by expanding generative AI infrastructure.
Strong memory demand propelled Nanya's profits to soar in the fourth quarter of 2025, with president Pei-Ing Lee highlighting sustained AI and general server needs driving a robust DRAM market into 2026. Customers are overbooking and seeking long-term agreements (LTAs), eyeing to secure sufficient supply.
AI has sparked a significant boom in the server industry, turning system manufacturing into a supply chain battle. For ODMs, success now hinges on deep collaboration with chip partners to integrate hardware, systems, and customer requirements effectively.
Apple and Google have entered into a multi-year strategic agreement under which Apple's next-generation foundation models will be built using Google's Gemini models and cloud infrastructure. The partnership will provide core technical support for a more personalized version of Siri that Apple plans to roll out in 2026.
To strengthen computing power reserves, the capexs of the four major cloud service providers (CSPs) are expected to remain strong in 2026 and support industry development. These investments are cascading downstream, creating large-scale AI server deployment projects that not only boost the performance of upstream and downstream electronic components and system assembly factories, but also drive pre-shipment electromagnetic compatibility (EMC) verification demand as product power design moves toward a megawatt-level high-power trend. This has accelerated the influx of professional electronic testing firms.
The Taiwan Machine Tool & Accessory Builders' Association (TMBA) held its annual outlook press conference on January 20, 2026, highlighting the impact of the recent US-Taiwan tariff agreement on the sector. The agreement, which prevents tariff stacking at a 15% rate, is expected to enhance the competitiveness of Taiwan's machine tool industry, aligning it with major players such as Japan and South Korea.
Taiwan's Ministry of Economic Affairs (MOEA) reported on January 20, 2026, that strong demand for IC manufacturing and AI servers propelled export orders to new heights in December 2025. With most IC manufacturing and AI server shipments originating from Taiwan, overseas production by Taiwanese firms—in China, Vietnam, Mexico, and elsewhere—has declined to 46.5%.
Following the easing of US reciprocal tariffs to 15%, Taiwan's Fortune Electric is seeing meaningful relief in cost pressures while accelerating growth driven by robust demand from AI data centers and US infrastructure investment.
Sequoia Capital is reportedly set to participate in a major funding round for AI startup Anthropic, marking a departure from its traditional practice of avoiding investments in direct competitors.
Asus announced on January 2, 2026, that it will not launch new smartphones in 2026, marking a strategic retreat from the mobile phone segment after more than two decades. Chairman Jonney Shih emphasized that Asus will continue to support existing smartphone users while reallocating resources toward longer-term strategic areas.
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