Taiwan's Legislative Yuan passed the Artificial Intelligence Basic Act (人工智慧基本法) on third reading on 23 December 2025, and President Lai Ching-te promulgated the 20-article statute on 14 January 2026, bringing it into force immediately. The Act designates the National Science and Technology Council (NSTC) as the central AI-policy competent authority and codifies seven governance principles — sustainability and well-being, human autonomy, privacy protection and data governance, cybersecurity and safety, transparency and explainability, fairness and non-discrimination, and accountability — that apply to all public-sector AI procurement and high-risk sectoral applications. The statute establishes a statutory foundation for the Taiwan AI Action Plan 2.0, mandates an Executive Yuan National AI Strategy Committee, and provides authority for sector-specific implementing regulations by FSC, NCC, MOHW, and MOTC across finance, telecoms, medical, and autonomous-vehicle AI within a two-year window. As the first national AI governance statute in the Greater China region and the third globally after the EU AI Act and South Korea's AI Basic Act, it frames regulatory expectations for the companies at the heart of the global AI hardware supply chain — TSMC, NVIDIA ODM partners, and advanced-packaging incumbents — that are headquartered or operate substantially in Taiwan.

Analyst notesShow

Mechanism

The Act is a horizontal framework statute — it sets principles, governance architecture, and institutional mandates rather than imposing direct licensing or conformity-assessment obligations on individual AI systems (the EU AI Act model). The key structural features:

Institutional architecture. NSTC becomes the "control tower" for national AI policy, coordinating sectoral regulators that retain vertical competence: the Financial Supervisory Commission (FSC) for financial-sector AI, the National Communications Commission (NCC) for telecoms-sector AI, the Ministry of Health and Welfare (MOHW) for medical and pharmaceutical AI, and the Ministry of Transportation and Communications (MOTC) for autonomous-vehicle and logistics AI. Within two years of promulgation (by January 2028), each sectoral regulator must issue implementing rules aligned with the Act's seven principles.

National AI Strategy Committee. The Executive Yuan must establish an inter-agency National AI Strategy Committee chaired by the Premier, with members drawn from academia, industry, agency heads, and local government, meeting at minimum annually. NSTC provides administrative support. The Committee formulates AI development guidelines and reviews implementing rules — effectively a standing governance body that did not previously exist in Taiwan's regulatory architecture.

Seven core principles (Article 5). All government AI procurement, public-sector AI deployment, and licensed-sector AI applications must adhere to: (1) sustainability and well-being, (2) human autonomy, (3) privacy protection and data governance, (4) cybersecurity and safety, (5) transparency and explainability, (6) fairness and non-discrimination, (7) accountability. These principles operate as juridical standards against which sector-specific implementing rules will be assessed.

Supply-chain and industrial-policy dimension. Articles mandate government action to promote AI R&D budgets, AI industry subsidies and preferential measures, regulatory-sandbox environments, talent cultivation, AI infrastructure development (compute + data centres with green-energy sourcing), and data-governance mechanisms. This directly extends the Taiwan AI Action Plan 2.0 (operational since 2023) and integrates it with the National Science and Technology Development Plan — providing fiscal-programme continuity regardless of future election outcomes.

Downstream implications

TSMC and ODM ecosystem. The statute formalises Taiwan's

regulatory environment for AI hardware development, giving multinational customers (NVIDIA, AMD, Apple, Google, Microsoft, Meta, Amazon) a statutory governance anchor for AI-supply-chain due-diligence disclosures required under the EU AI Act's upstream obligations (Art. 25 EEA-placed provider obligations where components are incorporated into EU-destined AI systems).

AI server ODM supply-chain exposure. Foxconn, Quanta,

Inventec, Wistron, Compal, Pegatron — collectively accounting for ~80% of global AI server market by unit volume — must align internal AI-system deployments with NSTC governance principles from January 2026 and sector-specific implementing rules by January 2028. This raises compliance-design costs but also positions Taiwan OEMs favorably in the EU market as "globally aligned" suppliers under the EU AI Act.

Advanced packaging. TSMC's CoWoS and SoIC platforms, and

advanced-node logic (N3/N2/A14 roadmap), are increasingly classified as AI-compute infrastructure rather than generic semiconductor manufacturing. The Act's data-governance and cybersecurity provisions will apply to AI systems embedded in design-automation and process-optimisation toolchains at fab level — triggering NCC + MOHW joint-rulemaking on industrial AI.

Financial-sector AI. FSC's implementing rules (due Jan 2028)

will cover AI-driven credit scoring, fraud detection, algorithmic trading, and robo-advisory products — consistent with the trajectory of the EU AI Act's financial-services annexes and Korea's FSS guidance issued under the South Korea AI Basic Act.

Regional precedent. Taiwan becomes the third jurisdiction

worldwide (after EU and South Korea) and the first in the Greater China region to have a horizontal AI governance statute. This creates pressure on Hong Kong, Singapore, and Japan (which has a non-binding AI governance framework) to advance more formal legislative approaches.