This paper examines the unique role of nonprofit institutes for economic affairs in Taiwans industrial transformation. The argument is that the conventional wisdom on public research institutes as state actors in industrial transformation will have to be revisited in order to better understand state intervention in Taiwans industrialization. The dual status of the Institute for Information Industry provides an excellent example of how an NIEA went through an institutional transformation to extricate itself from a political and economic impasse and justify state intervention in a more sophisticated way. Namely, on the one hand, NIEAs enjoy financial and politically privileged support from the state. On the other hand, the strategy of spinning off profitable units legitimizes their profit-making conduct without compromising their quasi-state nonprofit status. This paper argues that the operation of NIEAs may be controversial, but one should not ignore their unique institutional arrangement when studying Taiwans industrial transformation.