AGP Executive Report

TSMC AI surge: Taiwan Semiconductor reported June sales of NT$442.68 billion, up 67.9% year-on-year and 6.2% from May, lifting Q2 revenue to NT$1.27 trillion (+36% YoY) as investors brace for Thursday’s investor conference on capex and advanced process progress. Chip supply chain buildout: TSMC also plans more advanced packaging capacity in Chiayi Science Park, with Phase II adding three facilities after Phase I began mass production in June—aimed at easing the AI bottleneck in advanced packaging. Capex spotlight: An economist says TSMC’s accumulated capex could top US$150 billion over the next three years, with 2nm and 3nm production expanding overseas. Local governance & food safety: Premier Cho ordered Central Union tainted-oil testing and food-regulation amendments to be finished within a week, while Taichung identified two more contaminated batches and hundreds of downstream businesses for removal. Security policy debate: Taiwan’s defense ministry launched a pilot to outsource routine guard duties at military academies, a move meant to free troops for combat but raising concerns about contractor access amid rising espionage worries. Market mood: Taiwan’s TAIEX closed nearly flat as profit-taking hit semiconductors and electronics, even as TSMC’s strong monthly numbers kept sentiment supported. Global risk backdrop: Oil prices jumped after renewed US-Iran strikes, adding pressure to already jittery regional markets.

Typhoon Bavi Fallout: Super Typhoon Bavi has hit eastern China after brushing Taiwan, with about 2 million people evacuated in Zhejiang and a second landfall reported near Wenzhou; in Taiwan, the storm left at least 135 injured, 15,228 people evacuated, and nearly 250,000 households without power before alerts eased for Hualien’s barrier lake. Cross-Strait Security & Diplomacy: Taipei reiterated its South China Sea “Four Principles” as China-linked claims resurface, while a Taipei court case highlighted how CCP spy recruitment can start with “routine” information and social media outreach. US-Taiwan Ties: President Lai Ching-te mourned U.S. Sen. Lindsey Graham as “a true friend of Taiwan,” praising his long support for Taiwan-US cooperation. Local Governance & Oversight: Lawmakers sparred over the Legislative Yuan budget while leaving their own funding largely untouched, fueling criticism of uneven scrutiny. Public Safety & Scams: Police warned about a fake police-and-prosecutor scam that drained NT$19.12 million from a victim’s accounts. Tourism Crackdown: Taiwan’s Tourism Administration reported 1,609 illegal hotels and B&Bs fined NT$81.6 million in the first half of 2026. Tech & Markets: TSMC, Samsung and SK hynix together now make up over 30% of the MSCI Emerging Markets Index, underscoring how chip stocks sway regional returns.

Typhoon Bavi Aftermath: Typhoon Bavi has moved away from Taiwan, with the Central Weather Administration lifting land and sea warnings and reporting 135 injuries and 15,228 people evacuated; power outages are easing, though the barrier lake alert was downgraded only after inflows fell. Cross-strait Security: Taiwan’s Ministry of National Defence detected one PLAN vessel and four Chinese official ships operating around Taiwan, saying forces monitored and responded. Semiconductor Push: TSMC will build three more advanced packaging facilities at Chiayi Science Park Phase II, aiming to expand Taiwan’s AI and HPC chip supply chain. Food Safety Case: Health authorities withheld test results for 29 cooking-oil batches from Central Union Oil amid suspected sample falsification, as the tainted-oil row widens. US-Taiwan Relations: A U.S. scholar told CNA that Taiwan and the U.S. are semiconductor partners, rejecting claims that Taiwan “took” America’s chip industry. Aviation & Travel: As Bavi disrupted transport, rail and most air services around Taiwan and Taoyuan largely returned to normal, while some ferry routes to outlying islands stayed disrupted. Sports Spotlight: Taiwan’s women’s hurdlers won gold at the Asian U23 Athletics Championships, with Chung Hsin-ju and Yi Po-an taking top honors.

Typhoon Bavi: The storm made landfall in China’s Zhejiang late Saturday, after sweeping past northern Taiwan and Japan’s southern islands. China evacuated nearly 2 million people, with Zhejiang alone moving about 1.7 million, while Shanghai relocated tens of thousands from high-risk areas. Taiwan Disruption: In Taiwan, Bavi left 87 people injured and forced 14,476 evacuations, with power cut to 177,485 households; authorities issued major landslide warnings in multiple areas and kept some mountainous districts closed for Sunday. Cleanup & Services: Taipei and New Taipei said garbage collection will resume Sunday night with extra pickup options to handle storm debris. Travel Hit: Airlines and flights across the region were canceled or delayed, including Thai Airways canceling a Taipei-Bangkok service and multiple international cancellations tied to the storm. Regional Toll: In the Philippines, landslides and flooding linked to the storm-enhanced monsoon left at least 17 dead. Tech & Industry: Separate from the weather, Micron broke ground in Japan on a ¥1.5 trillion HBM expansion, targeting shipments around summer 2028.

Typhoon Bavi Fallout: Typhoon Bavi is battering Taiwan and Japan’s southern islands while China braces for a direct hit near Wenzhou early Sunday, with Beijing and eastern provinces reporting mass evacuations—over 1.8 million people moved in China as winds reached about 144 kph and rain bands remain a major threat. Local Cleanup & Services: Taipei and New Taipei will run extra garbage collection on Sunday night to help residents clear storm debris after two days of disrupted trash pickup. Injuries, Evacuations, Power Cuts: In Taiwan, 87 people were injured and 14,000+ evacuated, with power knocked out in 177,000+ households as red landslide alerts expanded across multiple counties. Travel Disruption: Transport across East Asia is taking a hit—Taiwan saw major flight cancellations and ferry suspensions, while Hong Kong reported 130+ flight cancellations and 10 high-speed rail trips halted. Food & Fuel Practicalities: CPC says gasoline and diesel prices will stay unchanged next week despite higher crude costs. Tech & Health Event: Insilico Medicine founder Alex Zhavoronkov will keynote at BIO Asia–Taiwan in Taipei, focusing on “sustainable longevity” and AI-driven drug discovery.

Typhoon Bavi Disrupts Taiwan: Taiwan shut markets, suspended work and closed schools and offices across northern and eastern areas as the storm neared, with evacuations topping 2,000 and rail curbs in place; airlines across Taiwan and Hong Kong canceled dozens of flights, while Japan’s southwest islands braced for violent winds and heavy rain. Philippines Volcanic Ash + Storm Fallout: Separate travel shocks hit the region too—Kanlaon ash forced Cebu flight cancellations, while Bavi-related landslides in the Philippines killed at least 15. Cross-Strait Security Alarm: Taiwan investigated the assault of Japanese commentator Akio Yaita in Taichung, with analysts warning it could reflect “long-arm” intimidation tactics. Tech Supply Chain Push: Memory giant Nanya said it will quadruple 2027 capex to about $6.2b as AI demand surges, and Micron broke ground in Japan for a ¥1.5t HBM expansion. Semiconductor Investment Abroad: Hsinchu-based King Yuan Electronics plans up to $1.4b to build a U.S. facility, aiming to deepen its role in Nvidia’s supply chain. Demographics Watch: Taiwan’s population fell for a 30th straight month as births keep dropping and aging accelerates, with Taipei the most elderly-heavy city. International Outreach: Taiwan expanded eVisa eligibility, including Armenia, and continued diplomatic outreach amid Australia’s debate over a Taiwan office in Perth.

Typhoon Bavi Disrupts Taiwan: Schools and offices across Taiwan’s main island shut Saturday as the storm’s rainbands move in, with Taitung County the only exception (except Lanyu and Ludao) and Kinmen keeping offices and classes open; Taiwan reported 5 storm-related injuries and 2,050 evacuations as the CEOC urged people to stay indoors and avoid landslide-prone areas. Travel Chaos From the Storm: Taiwan Railway suspended multiple tourist and local services, while airlines across the region canceled or adjusted flights to and from Taipei; Vietnam Airlines cut several Taiwan routes and shifted aircraft to keep capacity up. Regional Disaster Toll: Typhoon Bavi also brought deadly landslides in the Philippines, killing at least 15, as East Asia braces for flooding and strong winds. AI Memory Boom Hits Taiwan Firms: Nanya Technology plans to quadruple 2027 capex to more than T$200 billion as AI-driven memory demand keeps supply tight; King Yuan Electronics said it may invest up to $1.4 billion in a U.S. facility. Wages Climb: Taiwan’s average real regular wages rose 1.27% in Jan–May 2026, the biggest gain in six years, outpacing inflation. Culture & Sports: Taiwan’s girls’ volleyball team won its first ISF World School Volleyball title, and KEDING announced a U.S. expansion after a successful HD Expo debut.

Typhoon Bavi Watch: Taiwan and China stepped up emergency preparations as the giant storm nears, with Taiwan warning of destructive winds and up to 1 meter of rain in northern mountain areas; airlines and ferries adjusted schedules and Taipei set up sandbag collection stations. Cross-Strait Security: Taiwan’s coast guard hosted a patrol with foreign lawmakers around Kinmen, a “first time ever” move flagged by IPAC as a bid to observe China’s pressure tactics firsthand. AI Push for Local Firms: Taiwan’s Ministry of Economic Affairs said it will help more than 20,000 companies adopt AI by 2028, with support aimed largely at small and medium-sized businesses. Chip Supply Chain Signals: Memory makers and AI infrastructure spending stayed in focus, including Micron’s plan to invest over $250B in U.S. manufacturing through 2035 and SK hynix’s Nasdaq ADR fundraising. Public Safety & Services: As Bavi approached, Taiwan’s airlines canceled or rescheduled flights and urged travelers to check updates, while Hualien evacuated hundreds ahead of the worst conditions. Community & Culture: Taipei’s Fumin Ecological Park drew tree-and-biodiversity concerns over a landscape overhaul, while Taiwan’s overseas youth exchange program highlighted diplomacy and space ambitions.

Typhoon Bavi Watch: Taiwan is bracing for “destructive” winds and extreme rain as the storm nears, with the CWA warning of dangerous waves over 6 meters and possible up to 900 mm of rain in northern mountains; Taipei and nearby areas are preparing sandbags and tying down boats. Closures & Disruptions: Schools and offices in Taipei and multiple northern counties, plus Yilan and Hualien, will close Friday, while airlines cancel or suspend dozens of flights across the island and to regional hubs. Evacuations in Hualien: Hualien evacuated over 900 residents from 358 households due to landslide-dam risks, with monitoring focused on Wanli Creek and Matai’an Creek. Food Safety Recall: Taiwan expanded a tainted-oil recall tied to carcinogen benzo[a]pyrene, ordering removal of Central Union products and related processed foods from shelves by noon Friday. Cross-Strait Tensions: Taiwan condemned China for “glorifying violence” after an assault on a Taiwan-based Japanese commentator, escalating a political dispute over Beijing’s response. Markets & Policy: Taiwan’s central bank governor cautioned against excessive leverage as the AI-driven stock rally heats up, while June exports jumped 40.3% year-on-year to a record high, led by AI-related chips and electronics. Security & Diplomacy: Taiwan hosted a small group of foreign lawmakers on a Coast Guard patrol near Kinmen, underscoring concern over China’s expanding maritime “gray-zone” activities.

Cross-strait pressure and maritime moves: China is signaling it will keep a new coast guard patrol east of Taiwan, with Taipei warning the “law enforcement” posture is really expansionism and part of a broader effort to make routine engagement harder. Typhoon Bavi disruptions: Taiwan is ramping up storm readiness, suspending ferry services to offshore islands and preparing traffic and airline changes as Bavi nears, with impacts expected to peak later this week. Air defense upgrade: Taiwan’s Skyguard anti-aircraft guns are now fitted with anti-drone netting, reflecting how drone threats are reshaping military technology. Food safety fallout: Taiwan expanded its tainted cooking oil recall linked to carcinogen benzo[a]pyrene, adding more products and downstream items as lawmakers press officials to take responsibility. International response push: Taiwan called for coordinated global action regarding China’s pressure in the First Island Chain, urging an early warning mechanism. Tech and industry spotlight: Taiwan Excellence companies showcased edge AI, robotics and smart manufacturing at Automate 2026, underlining the island’s push to stay central to next-gen manufacturing. Business and AI infrastructure: A Taiwan-linked biotech collaboration effort is also gaining traction in Boston, while AI-and-power investment deals highlight how AI infrastructure is becoming a major theme.

Cross-Strait Maritime Pressure: China signals it will keep “law-enforcement” coast guard patrols east of Taiwan, after June operations that radioed passing ships—Taipei calls it “expansionism in disguise,” while U.S. and allies warn it could normalize new rules. Taiwan’s Grey-Zone Response: Taiwan officials say the real danger is a new status quo forming quietly through repeated pressure, and U.S. Sen. Tammy Duckworth urges countries to keep transiting under international law to deny China a foothold. Typhoon Bavi Disruptions: Taiwan ramps up storm prep, suspending some ferry routes and setting up possible sea and land warnings as Bavi nears. Food Safety Fallout: Taiwan expands its tainted cooking oil recall to 401 products, adding items from major brands after Central Union Oil was linked to excessive carcinogen levels. Local Emergency in Taipei: A sinkhole and gas leak hit a Formosa Plastics redevelopment site in Songshan, triggering evacuations and traffic restrictions. Tech and Markets: Taiex rebounds on TSMC support; separately, Apple moves to diversify chip sourcing with a $30B Broadcom deal for U.S.-made chips. Health Research: NTUH-linked study finds how lung cancer uses sensory nerves to weaken immunity, pointing to new treatment ideas.

Cross-Strait Security: Taiwan’s National Security Council deputy chief Lin Fei-fan said the island’s preparations for a possible Chinese attack are not a provocation, pointing to Beijing’s missile tests and daily military pressure as proof of aggressive intent. Grey-Zone Pressure: Taiwan’s National Security Bureau said China has deployed 110+ vessels along the First Island Chain, while Taiwan restores “anti-communist patriotic education” for military cadets after nearly 24 years. Targeted Repression Claims: A Taipei investigation office charged two people accused of helping China’s cyber spies impersonate ICIJ-linked reporters to steal data from Taiwanese officials and scholars. Japan-Taiwan Ties: Taiwan’s Vice President suggested a recent assault on a Japanese journalist may be linked to China’s “ethnic unity” law, as Taiwan and Japan continue to deepen security cooperation. Diplomatic Outreach: Taiwan will open a representative office in Phoenix to strengthen Taiwan–U.S. business and tech ties. Health & Industry: TaiMed Biologics said TFDA issued a drug license collection notice for Trogarzo, the final step toward commercial launch in Taiwan. Tech & Markets: Onsemi agreed to sell two chipmaking plants to cut costs, while GIGABYTE showcased AI TOP ATOM four-node clustering for local AI computing.

Cross-strait security: Taiwan’s National Security Council deputy secretary-general Lin Fei-fan said the island’s preparations for a possible Chinese attack are “not a provocation,” urging people to take the threat seriously as China ramps up military pressure. Grey-zone pressure: China’s nuclear-capable submarine missile test in the Pacific drew condemnation from U.S. allies and alarm across the region, while Taiwan said it’s tracking rising Chinese naval activity. Freedom of speech under pressure: Vice President Hsiao Bi-khim condemned the Taichung assault on Japan-linked commentator Akio Yaita, calling it a warning about transnational repression. Typhoon Bavi disruptions: Taiwan’s Maritime and Port Bureau will suspend multiple ferry routes ahead of the storm, with the worst rain expected Friday and Saturday and 29,000 troops on standby. Economy & markets: Taiwan’s inflation hit a 17-month high in June; the Taiex fell more than 2% as investors rotated out of electronics amid valuation worries and regional geopolitical jitters. Food safety: Central Union Oil was fined NT$165.2 million for failing to promptly report tainted soybean oil containing excessive benzo[a]pyrene. Finance sector: FSC approved Bank SinoPac’s merger with King’s Town Bank and E.Sun Financial’s acquisition of Mercuries Life. Sports & culture: Taiwan’s National Palace Museum will display a famed Genghis Khan portrait in a new exhibition; and Taiwanese-American Stuart Fairchild signed with the Seattle Mariners.

Cross-Strait Security: China test-fired a nuclear-capable submarine-launched ballistic missile into the Pacific, drawing sharp concern from the U.S., Japan, Australia, New Zealand—and Taiwan—after Taiwanese officials said the launch followed an “upward trend” in Chinese naval activity. Taiwan’s Response: Taiwan’s national security chief Joseph Wu called the test a provocation that destabilizes the Indo-Pacific, while Taipei said it is tracking the missile’s trajectory and the broader military pattern. Tech & Markets: Investors are watching whether the AI-led rally can keep going without leverage-driven swings, as semiconductor gains lift regional indexes but volatility remains a worry. Biotech Spotlight: Taiwan’s biopharma sector is stepping into the spotlight with a rush of IPOs, as the government pushes new strategic industries beyond semiconductors. Sports (Local Interest): USA Baseball named Ethan Lund to the inaugural World Collegiate Baseball Championship roster in Taichung (July 11-15), with Chinese Taipei also on the schedule. Culture & City Life: Taipei Zoo livestreamed giant panda Yuan Zai’s 13th birthday celebration with a World Cup-themed feast.

Cross-Strait Security: Taiwan condemned China’s submarine-launched ballistic missile test in the Pacific, saying it’s meant to intimidate and destabilize the region, as Japan, New Zealand and Australia also voiced concern. Grey-Zone Pressure: China’s coast guard and survey activity around the Pratas (Dongsha) Islands continues, with Taiwan warning the outpost is becoming a key test case for Beijing’s coercion strategy. Transnational Repression Fears: Taiwan arrested a Hong Kong man suspected of punching Japanese thinktank CEO Akio Yaita in Taichung; the Mainland Affairs Council said the case could involve transnational repression. Food Safety Probe: Taichung prosecutors are investigating why Central Union Oil’s cooking oil exceeded Taiwan’s benzo[a]pyrene limit, with about 1,300 tonnes recalled and the cause still under review. Taipei Markets: The Taiex fell 0.48% as investors worried about valuation pullbacks after AI-driven gains. AI Supply Chain & Finance: Unimicron is seeking up to US$1.4bn via a global share sale, while Foxconn reported a 40% quarterly sales jump on AI server demand. Local Life: Keelung plans to revoke a preschool’s license over child abuse allegations, and ferries to outlying islands will be suspended as Typhoon Bavi approaches. Sports: China beat Chinese Taipei 92-74 in World Cup Asian Qualifiers, booking the next round.

Taiwan’s AI boom stays loud: Foxconn (Hon Hai) reported a 39.8% year-on-year jump in Q2 revenue to NT$2.513 trillion, beating forecasts as AI server demand powered growth in its cloud and networking business; June revenue hit a record NT$821.8 billion (+52.1% y/y), and the company said AI rack shipments should keep momentum this quarter while warning that global politics remains “volatile.” Defense education shift: Taiwan’s military reinstated anti-communist patriotic classes for academy graduates after a 24-year pause, saying the move is meant to strengthen identity and prepare officers for China’s rising pressure. Cross-strait security debate: A Taiwan media commentary criticized AIT director Raymond Greene’s push for a “beehive” drone-heavy strategy, arguing it signals a deeper US effort to reshape Taiwan’s role. Public safety and food oversight: The MOHW will meet with four major cooking-oil producers to tighten a new oil management system after a benzopyrene-tainted recall expanded to processed foods made with more than 20% of the contaminated oil. Local governance and trust: Taipei City Police arrested nine suspects in a columbarium niche fraud scheme allegedly siphoning NT$42.9 million over five years. Culture and heritage: Film hunters in Taiwan are rescuing rare taiyupian reels, warning that only a fraction of an estimated 1,200 films has been preserved.