Key Points
—Presidents Santiago Peña and William Lai announced on May 10 a 50/50 joint project to build what Peña called one of the world’s largest artificial intelligence hubs, pairing Taiwanese semiconductor capacity with Paraguay’s renewable energy base
—The agreement is part of 7 instruments signed during Peña’s May 7-10 state visit, including a Memorandum of Understanding on a Sovereign AI Computing Center, plus deals on cybersecurity, justice cooperation and digital infrastructure investment
—Paraguay remains the only South American country with formal diplomatic ties to Taipei among 12 worldwide, and 2025 beef exports to Taiwan exceeded 288 million dollars, anchoring a roughly 70-year bilateral partnership
The Rio Times, the Latin American financial news outlet, reports that the Paraguay Taiwan AI hub announcement on May 10, 2026 closes a four-day state visit that turned a 70-year diplomatic relationship into the most concrete technology-cooperation framework Asunción has ever signed. Paraguayan President Santiago Peña told a Taipei audience and confirmed on social media that the two governments will fund a major artificial intelligence center on a 50/50 basis, pairing Taiwan’s leadership in semiconductor manufacturing with Paraguay’s renewable-energy surplus from the binational Itaipú and Yacyretá hydropower dams. The deal arrived alongside 7 separate agreements signed during the visit covering justice, cybersecurity, food industry, finance, commerce, and a specific Memorandum of Understanding on a Sovereign AI Computing Center.
What Was Announced
Peña framed the deal as “between two giants, we begin the path to create the world’s largest AI hub: Taiwanese technology with Paraguayan energy.” Taiwanese President William Lai, who hosted Peña across four days including a tour of the Southern Science Park in Tainan and the National Cloud Computing Center, said the project would gradually materialize the idea of combining Taiwan’s AI technology with Paraguay’s abundant green energy to “convert electricity into computing capacity.” The Paraguayan presidency confirmed the project will be co-financed in equal parts by both countries, though location and construction timetable have not been disclosed.
The 7 Agreements in Context
Peña arrived in Taipei on Thursday May 7 at the head of a delegation of more than 40 business leaders, with the formal agreement signing taking place Friday May 8. The instruments cover justice cooperation, cybersecurity, sovereign AI infrastructure, food industry, finance, and commerce, with the Sovereign AI Computing Center MOU functioning as the specific track that anchors the larger 50/50 hub vision announced Sunday. Peña received an honorary doctorate from the National Taiwan University of Science and Technology during the visit, which he described as a sign of the “solid alliance” between the two governments.
Why Paraguay, Why Now
| Factor | Position |
|---|---|
| Power mix | Roughly 100 percent renewable, dominated by Itaipú and Yacyretá hydro |
| Electricity surplus | Itaipú alone produces about 70 terawatt-hours annually; Paraguay uses well under half its share |
| 2026 GDP growth | Among the fastest in South America per World Bank April 2026 update |
| Taiwan ties | Only South American country with formal recognition; one of 12 globally |
| Bilateral trade 2025 | Beef exports to Taiwan above 288 million dollars; tariff-free pork access added |
| US alignment | Most pro-Washington elected government in South America under Peña |
The Geopolitical Backdrop
The announcement landed as Beijing intensifies its campaign to reduce Taiwan’s formal diplomatic ties, with Taipei now down to 12 official partners globally, 7 of them in Latin America and the Caribbean. Days before Peña’s arrival, Taiwanese authorities denounced Chinese diplomatic pressure on several African countries to obstruct recent foreign trips by President Lai. Peña reaffirmed Asunción’s support for Taiwan in a Taipei ceremony, declaring that the two countries are “partners firmly committed to the values of democracy, freedom and human rights.” Lai publicly thanked Paraguay for its diplomatic backing.
The Energy-to-Compute Thesis
The technical logic is straightforward: AI inference and training are now constrained by two inputs, advanced chips and clean electricity, and Taiwan controls roughly 90 percent of leading-edge logic fabrication through TSMC and its supply chain. Paraguay sits on one of the cheapest and cleanest power bases in the hemisphere, with hydroelectric generation that for years has run well above domestic demand and that the renegotiated Itaipú Annex C now lets Asunción monetize on commercial terms. Pairing the two assets in a single jurisdiction has been the explicit policy thesis of the Peña administration since mid-2025.
Comparable hyperscale AI infrastructure projects offer rough cost benchmarks. The UAE-France 1-gigawatt AI campus signed in February 2025 was valued at 50 billion euros, and Brazil’s Rio AI City program targets 3.2 gigawatts by 2032 against a 65 billion dollar capex frame. Neither Asunción nor Taipei has yet disclosed a target gigawatt rating, capital envelope, or operator structure for the Paraguay project, which leaves the “largest in the world” characterization as a political target rather than a verified specification.
Connected Coverage
Rio Times tracks this file through our analysis of Paraguay’s Itaipú-anchored AI infrastructure thesis and our reporting on the pre-trip framing of Peña’s Taiwan visit. The macro context sits in our coverage of Paraguay’s South America-leading growth profile, and the regional energy backdrop in our piece on the Brazil-Paraguay Itaipú deal reset. Comparable AI infrastructure plays are detailed in our reporting on the 65 billion dollar Rio AI City program.
What to Watch
- Site selection, capacity rating, and capex envelope, none of which Asunción has yet disclosed
- Beijing’s response, given how visible the Lai-Peña ceremony was on China’s Taiwan periphery
- Whether the project secures a TSMC or other tier-one foundry partner, the missing variable on the silicon side
- Energy allocation mechanics through Itaipú and Yacyretá, since the project’s value proposition depends on long-dated cheap-power commitments
Frequently Asked Questions
What exactly was signed on May 10?
Paraguay and Taiwan announced a 50/50 joint project to build one of the world’s largest artificial intelligence hubs on Paraguayan soil, pairing Taiwanese semiconductor capacity with Paraguayan renewable energy. The legal anchor is a Memorandum of Understanding on a Sovereign AI Computing Center signed Friday May 8, part of 7 agreements covering justice, cybersecurity, food industry, finance and commerce that were concluded during Peña’s 4-day state visit.
How will Paraguay finance its 50 percent share?
The Paraguayan government has not disclosed the total capex envelope or its financing structure. Comparable hyperscale AI projects offer rough scale references: the UAE-France 1-gigawatt campus was valued at 50 billion euros, and Brazil’s Rio AI City targets 3.2 gigawatts at 65 billion dollars. Paraguay’s leverage point is its Itaipú electricity surplus, which produces roughly 70 terawatt-hours annually and which the renegotiated Annex C now allows Asunción to monetize.
How significant are the Paraguay-Taiwan economic ties?
Bilateral trade has accelerated, with Paraguayan beef exports to Taiwan exceeding 288 million dollars in 2025 and making Taipei one of the top destinations for Paraguay‘s premium meat. The two governments also recently agreed on tariff-free access for Paraguayan pork. Paraguay has maintained formal diplomatic recognition of the Republic of China for roughly 70 years, making it the only South American country in Taiwan’s diplomatic network of 12 official partners worldwide.
What does this mean for Latin America’s AI infrastructure race?
Paraguay joins Brazil’s Rio AI City at 65 billion dollars and 3.2 gigawatts, plus Mexican and Chilean hyperscaler announcements, as part of a regional push to convert renewable power surpluses into compute capacity. The Paraguay-Taiwan deal is distinctive because it ties advanced semiconductor supply directly into the project rather than relying on commercial chip procurement, a structural advantage no other Latin American AI infrastructure project currently has.
Updated: 2026-05-11T20:45:00Z