Taiwan is betting on silicon photonics to keep its grip on the AI chip supply chain, good news for TSMC, ASE, MediaTek, and Foxconn.

• Silicon photonics swaps copper wires for light to move data between chips, cutting power use by 30-50%.
• More than 30 Taiwanese heavyweights, including TSMC, ASE, MediaTek and Foxconn, have formed a silicon photonics alliance to keep the whole supply chain at home.
• Taiwan holds over half the world's chip packaging and testing market, the piece that matters most for building these light-based chips.
• The government has made silicon photonics a pillar of its new AI infrastructure plan and is funding research into the hardest technical steps.
• The big hurdle is co-packaged optics, the technology needed to break past the limits of today's electrical data links.

Outlook: Expect more government money and joint research as Taiwan tries to lock in an early lead before rivals catch up.