Taiwan is an important production hub for automotive semiconductors, the country's Department of Investment Services says.
With the largest car market on its doorstep in mainland China, semiconductors made in Taiwan are seeing growing demand for automotive applications, the authority suggests.
"Demand for automotive semiconductors in the Asia-Pacific region has grown dramatically and the leading European and US suppliers have found that demand is beginning to outstrip their production capacity," the department adds.
The geographical location of the island is singled out as one reason behind its success, as it effectively forms a conduit between the industrial manufacture of automobiles and the consumer retail car market.
Recent independent industry analysis has shown positive growth in areas of the automobile market worldwide.
Electronic components analyst iSuppli reported expansion in demand for microelectromechanical system sensors for use in vehicles, with the market expected to hit new highs by the end of 2010.