The innovation policy priorities in industry evolution: the case of Taiwan’s semiconductor industry

This paper explores the innovation policy priorities in industrial evolution. This issue has not been discussed in most of the literature. Taiwan has devoted considerable resources to the semiconductor industry. Resources have been aimed at promoting research and development-based industrial activity and economic growth. This paper chose the Taiwan semiconductor industry for a case study study on the innovation policy priorities in industry evolution. Many of the policy tools for innovation were found to be different in the four phases. An ‘Environment side’ policy was shown to be vital for the initial phase of industry evolution. Government involvement in the later phase of industry evolution is not necessary. However, to maintain domestic technology capacity, the government should focus its industrial development strategy onto innovation for the next generation of technological R&D. ‘Environment side’ policy should play a vital role once again. In the above shifting pattern, policy establishments were pulled by the industry needs for evolution.