Taiwan Banks Boost AI, Defense Lending Under FSC Incentive Plan

Taiwan is directing financial resources toward five “trusted industries” — semiconductors, artificial intelligence, defense, security and surveillance, and next-generation communications — as part of a broader effort to strengthen economic resilience and critical supply chains. Lending trends at domestic banks show policy-backed capital increasingly flowing into technology and defense sectors viewed as strategically important to the island’s competitiveness and security.

The Financial Supervisory Commission said outstanding loans by Taiwan’s domestic banks to the five industries reached NT$4.6452 trillion as of end-June, rising by more than NT$400 billion in three months. That put the first-stage lending target at 342.37% of plan. Defense and artificial intelligence accounted for the two largest financing categories, with state-controlled lenders including Bank of Taiwan providing much of the support.

Taiwan’s government is promoting semiconductors, artificial intelligence, defense, security and surveillance, and next-generation communications as its “Five Trusted Industry Sectors,” which it regards as pillars of national security and economic development. Domestic banks’ willingness and capacity to finance these industries directly affect technology upgrades and expansion across local supply chains. Lending is also an important gauge of the outlook and future global competitiveness of Taiwan’s advanced technology industries.

Financial Supervisory Commission data showed that outstanding domestic bank loans to the five sectors reached NT$4.43 trillion at the end of May. AI ranked second with NT$1.11 trillion in outstanding loans after an increase of NT$38.3 billion during the month, signaling strong capital inflows. Outstanding loans to three sectors, including defense, have each surpassed NT$1 trillion. New lending in May exceeded NT$100 billion, pushing overall lending beyond the target.

Taiwan’s Financial Supervisory Commission has disclosed for the first time lending statistics from domestic banks to the government’s “Five Trusted Industries,” highlighting how the financial system is allocating funds in support of industrial policy. The data offer a gauge of whether bank credit is supporting upgrades in Taiwan’s key industries, with the scale of financing for artificial intelligence drawing particular attention.

As of the end of April this year, outstanding loans from domestic banks to the five industries had reached NT$4.3 trillion, or 76% of the policy target. Loans to the AI industry totaled NT$1.0768 trillion, the second-largest amount among the five sectors, showing that AI-related companies had received more than NT$1 trillion in bank financing.