Economy of Taiwan

Agriculture has served as a strong foundation for Taiwan's economic miracle. It contributes 3% to GDP and the service sector makes up 73% of the economy. After retrocession from Japan in 1945, the government announced a long-term strategy of "developing industry through agriculture, and developing agriculture through industry". As such, agriculture became the foundation for Taiwan's economic development during early years and served as an anchor for growth in industry and commerce. Whereas in 1951, agricultural production accounted for 35.8% of Taiwan's GDP, by 2013, it had been vastly surpassed, and it's NT$475.90 billion accounted for only 1.69% of the GDP. As of 2013, Taiwan's agriculture was a mixture of crops (47.88%), livestock (31.16%), fishery (20.87%), and forestry (0.09%). Since its accession into the World Trade Organization and the subsequent trade liberalization, the government has implemented new policies to develop the sector into a more competitive and modernized green industry.

Due to the lack of natural resources on the island, Taiwan is forced to import many of its energy needs (currently at 98%). Imported energy totaled US$11.52 billion in 2002, accounting for 4.1% of its GDP. Although the industrial sector has traditionally been Taiwan's largest energy consumer, its share has dropped in recent years from 62% in 1986 to 58% in 2002. Taiwan's energy consumption is dominated by crude oil & petroleum products (48.52%), followed by coal (29.2%), natural gas (12.23%), nuclear power (8.33%), and hydroelectric power (0.28%). The island is also heavily dependent on imported oil, with 72% of its crude oil coming from the Middle East in 2002. Although the Taiwan Power Company (Taipower), a state-owned enterprise, is in charge of providing electricity for the Taiwan area, a 1994 measure has allowed independent power producers (IPPs) to provide up to 20% of the island's energy needs. Indonesia and Malaysia supply most of Taiwan's natural gas needs. It currently has three operational nuclear power plants. A fourth plant under construction was mothballed in 2014. Although Taiwan's per capita energy use is on par with neighboring Asian countries, in July 2005 the Ministry of Economic Affairs announced plans to cut 170 million tons of carbon dioxide emissions by 2025. In 2010, carbon dioxide emissions have been reduced by 5.14 million metric tons.In order to further reduce emissions, the government also plans to increase energy efficiency by 2% each year through 2020. In addition, by 2015, emissions are planned to be reduced by 7% compared to 2005 levels. Taiwan is the world's 4th largest producer of solar-powered batteries and largest LED manufacturer by volume. In 2010, Taiwan had over 1.66 million square meters of solar heat collectors installed, with an installation density that ranks it as third in the world. The government has already built 155 sets of wind turbines capable of producing 281.6 MW of electricity, and additional projects are planned or under construction. Renewable energy accounts for 6.8% of Taiwan's energy usage as of 2010. In 2010, the green energy sector generated US$10.97 billion in production value. The government also announced plans to invest US$838 million for renewable energy promotion and an additional US$635 million for research and development.

Taiwan's information technology industry has played an important role in the worldwide IT market over the last 20 years. In 1960, the electronics industry in Taiwan was virtually nonexistent. However, with the government's focus on development of expertise with high technology, along with marketing and management knowledge to establish its own industries, companies such as TSMC and UMC were established. The industry used its industrial resources and product management experience to cooperate closely with major international suppliers to become the research and development hub of the Asia-Pacific region. The structure of the industry in Taiwan includes a handful of companies at the top along with many small and medium-sized enterprises (SME) which account for 85% of industrial output. These SMEs usually produce products on an original equipment manufacturer (OEM) or original design manufacturer (ODM) basis, resulting in less resources spent on research and development. Due to the emphasis of the OEM/ODM model, companies are usually unable to make in-depth assessments for investment, production, and marketing of new products, instead relying upon importation of key components and advanced technology from the United States and Japan. Twenty of the top information and communication technology (ICT) companies have International Procurement Offices set up in Taiwan. As a signer of the Information Technology Agreement, Taiwan phased out tariffs on IT products since 1 January 2002. Taiwan is a hub for global computing, telecommunications, and data management with a number of large server farms operating in the country. Google's data center in Changhua is believed to be the largest in Asia. Taiwan is well connected to the global undersea fiber optic cable network and serves as a substantial traffic interchange.

Taiwan is a major producer of sporting goods with NT$59.8 billion of production in 2020, 40-50% of production is indoor fitness equipment. Taiwan is the global leader in golf equipment with 80% of global production concentrated in the country. The four largest golf OEM are all Taiwanese, however, these firms are increasingly selling products under their own brands. The Taiwanese bicycle industry is significant. Production peaked at ten million units a year in the 1980s but declined as low end production moved abroad and domestic manufactures moved upmarket. Giant Bicycles and Merida Bikes are the largest Taiwanese bicycle manufacturers. Mountain bikes and ebikes make up much of contemporary production. In 2022 the bicycle industry hit a record $6 billion US in revenue.

The semiconductor industry, including IC manufacturing, design, and packing, forms a major part of Taiwan's IT industry. Due to its strong capabilities in OEM wafer manufacturing and a complete industry supply chain, Taiwan has been able to distinguish itself from its competitors. The sector output reached US$39 billion in 2009, ranking first in global market share in IC manufacturing, packaging, and testing, and second in IC design. Taiwan Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC) are the two largest contract chipmakers in the world, while MediaTek is the fourth-largest fabless supplier globally. In 1987, TSMC pioneered the fabless foundry model, reshaping the global semiconductor industry. From ITRI's first 3-inch wafer fabrication plant built in 1977 and the founding of UMC in 1980, the industry has developed into a world leader with 40 fabs in operation by 2002. In 2007, the semiconductor industry overtook that of the United States, second only to Japan. Although the global financial crisis from 2007 to 2010 affected sales and exports, the industry has rebounded with companies posting record profits for 2010. The international industrial forecast of semiconductor manufacturing, which is the flagship industry of the economy of Taiwan that faces immense competition ahead with its American counterparts. By 2020 Taiwan was the unmatched leader of the global semiconductor industry with Taiwan Semiconductor Manufacturing Company (TSMC) alone accounting for more than 50% of the global market.