Taiwan’s Performance and Trajectory in Dual-Use Digital Twin and IoT Technologies

Date: 2025-06-08

Executive Summary

Taiwan is emerging as a significant player in the development and deployment of dual-use technologies, particularly in the fields of digital-twin-technology, digital-twins, and the internet-of-things. With its advanced semiconductor industry, robust manufacturing base, and a growing ecosystem of technology firms—including prominent organisations such as MetAI and TXOne Networks—Taiwan is leveraging its strengths to address both civilian and defence needs. The government’s strategic investments, public-private partnerships, and international collaborations have positioned Taiwan as a regional leader in these domains.

However, the island faces notable challenges. These include talent shortages, cybersecurity vulnerabilities, and the persistent threat of geopolitical instability. Despite these weaknesses, Taiwan’s trajectory remains positive, with a growing focus on indigenous innovation, export opportunities, and the integration of emerging technologies into both industrial and military applications.

This report provides a comprehensive assessment of Taiwan’s current performance and future outlook in dual-use digital twin and IoT technologies, with a focus on the roles of MetAI and TXOne Networks, and the broader ecosystem.

Strengths

Advanced Industrial Base

Taiwan’s global leadership in semiconductor manufacturing—anchored by companies such as TSMC—provides a critical foundation for the development and deployment of digital-twin-technology and the internet-of-things. The availability of cutting-edge chips and sensors enables the rapid prototyping and scaling of IoT devices and digital twin solutions.

Innovation Ecosystem

Organisations like MetAI and TXOne Networks exemplify Taiwan’s vibrant innovation ecosystem. MetAI is at the forefront of integrating AI-driven analytics with digital twin platforms, enabling real-time simulation and predictive maintenance for both civilian and defence applications. TXOne Networks, a leader in industrial cybersecurity, provides essential protection for IoT infrastructure and digital twin environments, addressing one of the most critical vulnerabilities in dual-use technology deployment.

Government Support

The Taiwanese government has prioritized digital transformation and smart manufacturing under its “Smart Taiwan 2030” initiative. Substantial funding and policy support have accelerated R&D in digital twins and IoT, with specific incentives for dual-use technologies that can serve both commercial and defence sectors.

Integration of Dual-Use Technologies

Taiwan’s defence sector is increasingly integrating digital-twin-technology and internet-of-things solutions into command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR) systems, logistics, and maintenance. This integration enhances operational readiness, asset management, and situational awareness.

International Collaboration

Taiwan maintains active partnerships with leading technology nations, including the United States, Japan, and members of the European Union. These collaborations facilitate technology transfer, joint R&D, and interoperability—essential for the rapid evolution and deployment of dual-use technologies.

Weaknesses

Talent Shortages

Despite its technological prowess, Taiwan faces a shortage of high-skilled professionals in data science, AI, and cybersecurity. This talent gap is particularly acute in the fields of digital-twin-technology and advanced IoT, where competition from global tech giants and domestic demographic trends exacerbate recruitment and retention challenges.

Cybersecurity Vulnerabilities

The proliferation of IoT devices and the increasing complexity of digital twin environments have expanded the attack surface for cyber threats. While TXOne Networks provides advanced solutions, the overall ecosystem remains vulnerable to sophisticated attacks, including those potentially orchestrated by state actors.

Fragmented Standards

The rapid development of digital-twins and IoT platforms has led to a fragmented landscape of standards and protocols. This fragmentation hampers interoperability, complicates integration across different systems, and increases the risk of vendor lock-in.

Geopolitical Risks

Taiwan’s unique geopolitical situation presents persistent risks. The threat of cyber and kinetic attacks from the People’s Republic of China (PRC) complicates the development and deployment of dual-use technologies, particularly those with defence applications.

Limited Domestic Market for Defence Applications

While Taiwan’s commercial sector is robust, the domestic market for defence-specific digital twin and IoT solutions is comparatively limited. This constrains economies of scale and may limit the pace of innovation relative to larger defence markets.

Notable Programmes & Investments

Government Initiatives

• Smart Taiwan 2030: This flagship initiative includes dedicated funding for the development of digital-twin-technology and IoT solutions, with a focus on smart manufacturing, critical infrastructure, and defence applications.
• National Defence Technology Development Plan: The Ministry of National Defence has earmarked significant resources for the integration of digital twins into C4ISR, logistics, and predictive maintenance of military assets.

Industry-Led Programmes

• MetAI Digital Twin Platform: MetAI has developed a comprehensive platform that integrates AI, real-time sensor data, and simulation tools for both industrial and military applications. Recent deployments include digital twins for naval vessel maintenance and smart factory automation.
• TXOne Networks Industrial IoT Security Suite: TXOne Networks offers a suite of cybersecurity solutions tailored for IoT and digital twin environments, including anomaly detection, secure device onboarding, and network segmentation. These solutions are deployed across critical infrastructure and defence facilities.

Academic and Research Collaborations

• Joint Research Centers: Leading universities, such as National Taiwan University and National Tsing Hua University, have established joint research centers with industry partners to advance digital twin modeling, IoT device miniaturization, and secure communications.
• International Partnerships: Taiwan participates in multinational research consortia focused on interoperability standards, AI-driven simulation, and secure IoT protocols.

Venture Capital and Startup Ecosystem

• Increased Investment: Taiwanese venture capital firms have increased funding for startups developing dual-use digital twin and IoT solutions, with a focus on AI integration, edge computing, and secure connectivity.
• Incubators and Accelerators: Government-backed incubators support early-stage companies in prototyping and scaling dual-use technologies, often in collaboration with established players like MetAI and TXOne Networks.

Competitive Comparison

Regional Peers

• South Korea and Japan: Both countries have advanced digital twin and IoT capabilities, with strong government support and large domestic markets. However, Taiwan’s semiconductor leadership and agile innovation ecosystem provide a competitive edge in hardware-software integration.
• Singapore: While Singapore excels in smart city applications and cybersecurity, Taiwan’s manufacturing base and defence-oriented R&D give it an advantage in dual-use industrial and military applications.

Global Benchmarks

• United States: The US remains the global leader in dual-use digital twin and IoT technologies, driven by massive defence budgets, deep talent pools, and integrated innovation ecosystems. Taiwan competes effectively in niche areas—particularly hardware and secure industrial IoT—but lags in large-scale system integration and platform dominance.
• Europe: Germany and France are leaders in industrial digital twins and IoT, especially in automotive and aerospace sectors. Taiwan’s strengths in semiconductors and agile startups position it as a valuable partner but not a direct competitor at scale.

Unique Value Propositions

• Hardware-Software Synergy: Taiwan’s ability to integrate advanced semiconductors with AI-driven digital twin platforms is a distinctive strength, exemplified by organisations like MetAI.
• Cybersecurity Focus: The expertise of TXOne Networks in securing industrial IoT environments is increasingly recognized internationally, providing Taiwan with a competitive niche in the global market.

Opportunities for Collaboration / Export

International Partnerships

• US and Allied Defence Sectors: Taiwan’s digital twin and IoT solutions are increasingly compatible with US and allied defence standards, opening opportunities for joint development, technology transfer, and export of secure, interoperable platforms.
• ASEAN Markets: Southeast Asian nations are investing heavily in smart infrastructure and defence modernization. Taiwan’s cost-effective, scalable digital twin and IoT solutions are well-suited for export to these markets.

Civil-Military Integration

• Smart Cities and Critical Infrastructure: Taiwan’s expertise in digital twins for smart factories and urban infrastructure can be leveraged for dual-use applications, including disaster response, energy management, and homeland security.
• Predictive Maintenance and Logistics: The integration of digital twins into logistics and maintenance for both civilian and military fleets presents export opportunities, particularly in regions with aging infrastructure.

Academic and Research Exchanges

• Joint R&D: Collaborative research with international universities and research institutes can accelerate the development of next-generation digital twin and IoT technologies, while also facilitating talent exchange and capacity building.

Technology Licensing and OEM Partnerships

• Licensing Agreements: Taiwanese firms can license digital twin platforms and IoT security technologies to global partners, leveraging their hardware expertise and cost advantages.
• OEM Manufacturing: Taiwan’s manufacturing capabilities position it as a preferred partner for the production of IoT devices and digital twin-enabled hardware for global brands.

Risks & Mitigation

Geopolitical Tensions

Risk: Escalating tensions with the PRC could disrupt supply chains, limit international collaboration, and expose critical infrastructure to cyber or kinetic attacks.

Mitigation:

• Diversify supply chains and build strategic reserves of critical components.
• Enhance cyber resilience through “zero trust” architectures and continuous monitoring, leveraging solutions from TXOne Networks.
• Strengthen international alliances and pursue joint R&D to ensure access to critical technologies.

Cybersecurity Threats

Risk: The expansion of IoT and digital twin deployments increases exposure to cyber attacks, including ransomware, data breaches, and industrial sabotage.

Mitigation:

• Mandate robust cybersecurity standards for all dual-use technology deployments.
• Invest in workforce training and certification in cybersecurity best practices.
• Deploy advanced threat detection and response tools, such as those developed by TXOne Networks.

Talent Drain

Risk: Competition from global tech firms and domestic demographic trends may exacerbate shortages of skilled professionals in AI, cybersecurity, and systems integration.

Mitigation:

• Expand STEM education and vocational training programs.
• Offer incentives for talent retention, including competitive compensation and career development opportunities.
• Foster international talent exchange programs with allied nations.

Fragmentation and Interoperability

Risk: The proliferation of proprietary platforms and lack of common standards may hinder integration and scalability.

Mitigation:

• Promote the adoption of open standards and interoperability frameworks.
• Participate in international standards-setting bodies and consortia.
• Encourage industry collaboration on shared platforms and APIs.

Market Limitations

Risk: The relatively small domestic defence market may constrain the scale and pace of innovation.

Mitigation:

• Pursue export opportunities and international partnerships to access larger markets.
• Leverage government procurement to support early-stage adoption and scaling of dual-use technologies.

Outlook (5-year)

Technology Trajectory

Over the next five years, Taiwan is poised to consolidate its leadership in the integration of digital-twin-technology, digital-twins, and the internet-of-things for dual-use applications. The convergence of AI, advanced semiconductors, and secure connectivity will drive the development of increasingly sophisticated digital twin platforms, with applications spanning smart manufacturing, critical infrastructure, and defence.

Organisational Evolution

MetAI is expected to expand its role as a leading provider of AI-driven digital twin solutions, with increased penetration into defence and export markets. TXOne Networks will likely continue to set benchmarks in industrial IoT cybersecurity, both domestically and internationally.

Market Expansion

Taiwanese firms are well positioned to capture a growing share of the global market for dual-use digital twin and IoT solutions, particularly in the Asia-Pacific region. Export growth will be driven by demand for cost-effective, secure, and interoperable platforms.

Policy and Ecosystem Development

Government policies will continue to prioritize digital transformation, talent development, and international collaboration. Increased investment in R&D, coupled with incentives for civil-military integration, will accelerate the pace of innovation.

Risk Landscape

Geopolitical risks will remain a persistent challenge, but ongoing investments in cybersecurity, supply chain resilience, and international partnerships will help mitigate the most severe threats.

Conclusion

Taiwan’s performance in dual-use digital twin and IoT technologies is robust and improving. By leveraging its strengths in semiconductors, innovation, and cybersecurity—exemplified by organisations like MetAI and TXOne Networks—Taiwan is well positioned to remain a regional leader and a valuable partner in the global technology ecosystem. Continued attention to talent development, cybersecurity, and international collaboration will be essential to sustaining this trajectory over the next five years.