At the end of the first working day of 2023, two men from a Taiwanese construction crew got into an SUV and drove off. They were the last to leave a muddy work site with stacks of metal slats strewn between prefab worker housing and a four-level structure covered with scaffolding. Just one commuter rail stop away, at the polished showroom of Eason Tsai’s office in the sprawling city of Taoyuan, detailed maps and a 3D model show an office tower designed for 40-50 hi-tech tenants – located alongside both a smaller building dubbed Startup Island and a model of the scaffold-covered structure: a would-be exhibition centre. Tsai leads the company overseeing construction on the first third of the ambitious undertaking that has been hailed as the “Asia Silicon Valley” and billed by the government as both a major economic and innovation booster. But construction on the project’s phase one, which was originally due to wrap up this year, now faces a delay until 2026 – hence the muddy work site. To make matters worse, analysts say prospective hi-tech tenants are not all that interested. “What are the entities that are committed to starting in Taoyuan? It isn’t really clear,” said Kent Chong, a partner with professional services firm PwC in Taipei. Smaller firms in niche areas of hi-tech may rent office space in Asia Silicon Valley, he said, but “for more industries and more mature businesses, I don’t see any incentives for them doing so”. Taiwan’s giant tech sector has historically leaned on hardware such as PCs and servers. Inflation in the prices of building materials made it more difficult to secure contractors in 2020 when Tsai’s office began looking. Now it is easier to find contractors as inflation and global pandemic controls have eased, Tsai said. To wit, R&D and service centres at the Taoyuan-based Asia Silicon Valley site are due to wrap up this year at a cost of US$163 million. The government’s National Development Council said in 2016, when the Asia Silicon Valley project was announced, that it planned to initially allocate US$358 million. The money was earmarked for internet infrastructure, mobile broadband services and industry-university collaboration. But by 2026, current-generation technology such as 5G infrastructure may evolve to the point where prospective tenants have little interest in Asia Silicon Valley sites, Tsai said. For Gogolook, a decade-old company that develops anti-fake and anti-scam software for social media apps, the Asia Silicon Valley endeavour would mean little to its business, according to CEO Jeff Kuo. “Most of our activities are in Taipei, and if we do remote work, then location isn’t that important,” he said. Taipei is a 30- to 45-minute drive away. He said that another programme started by the government, Taiwan Startup Stadium, helps burgeoning firms connect with partners from overseas – part of the intended purpose of Asia Silicon Valley. How is China rebuilding supply chains abroad after 3 years of isolation? As Taiwan’s start-up environment “isn’t that good”, the government must offer unwavering support for Asia Silicon Valley to avoid more delays or over-complexity, said Brady Wang, a Taipei-based analyst with Counterpoint, a market research firm specialising in technology. “If it’s not done that well … then the business community and the government’s ideas will differ,” he said. Taiwanese President Tsai Ing-wen’s government rolled out Asia Silicon Valley to help advance Taiwan’s broader goal of ensuring economic growth. Asia Silicon Valley is expected to help 200 start-ups “succeed” and command 5 per cent of the world’s internet-of-things production value, among a plethora of other metrics outlined in a November report by the Taiwan government’s National Science and Technology Council. The endeavour will “make Taiwan a key force in Asia’s digital innovation”, the report said. Taiwanese officials are seeking a revamp of their economy this year amid plummeting global demand, which in turn is slowing exports of Taiwan-made phones, PCs and components such as chips. High global inflation, snarled supply chains in mainland China, and spillover effects from the war in Ukraine choked consumer sentiment last year. Tsai Ing-wen said in her annual New Year’s Day speech that her government would work in 2023 to “restructure” industry and “appropriately” raise spending to protect people’s quality of life and to upgrade the industrial sector so it is more “competitive” in the long term. Analysts say the project is unlikely – at least for any time soon – to reach the scale of its inspiration and namesake, Silicon Valley in California. California’s tech hub has evolved over some 50 years, as big-name companies moved in, drew talent from nearby schools such as Stanford University and spawned a network of suppliers. The area, known for spawning tech entrepreneurs through sometimes multiple business failures, is now home to the likes of Intel, Google and Facebook. ‘Difficult battle’ for Silicon Valley as China ramps up tech spending “Taiwan has got to do more than throw money and develop science parks,” said Sean Su, an independent tech analyst on the island. “You have to have the companies to back the universities, the culture of competition and the diversity of backgrounds in a firm.” Taiwan lacks the wages to attract foreign talent, some experts argue. The average salary there for a software engineer is US$59,000, according to Glassdoor.com. As Europe and the US develop their own domestic supply chains to ensure that they have access to enough chips, Asia Silicon Valley still stands to help Taiwan maintain its edge in semiconductors, according to Tony Phoo, an economist with Standard Chartered Bank in Taipei. Taiwan makes about 60 per cent of the world’s chips, including the most advanced. “It probably lays the foundation in terms of enabling Taiwan semiconductors to improve their positions in the global supply chain,” Phoo said. “It sort of benefits from the Sino-US trade dispute, and that has created a better environment for Taiwan semiconductors to flourish.” The Asia Silicon Valley Development Agency did not reply to a request for more information on the project. And officials with the National Development Council, under which the agency falls, declined to comment about the project’s status when approached by the Post last month. Funding for the project continues to be an issue, as Taoyuan’s city government is paying for part of the project but lacks the wealth of the capital Taipei, Eason Tsai said. A city publicist told the Post that Taoyuan was paying for the project’s R&D centre. About 40 major companies, including Cisco and Microsoft, have committed a range of support for the development of Asia Silicon Valley. “For Microsoft, we have a strong interest in strengthening the local partner ecosystem, enabling more innovation from Taiwan, and accelerating the transformation of the local industry and economy,” a company spokesman in Taipei said.