Smart manufacturing is an important part in sustainable development of smart cities. The industrial revolution under smart manufacturing evolves the traditional automatic modes with mass production into the efficiency of small, diverse and rapidly customized manufacturing and collaborative manufacturing, and can solve increasingly serious shortage of work force resulting from decline in working-age populations. IoT and Internet services can be used to develop smart factories, so as to enable all mechanical units to have the ability to communicate with each other, through smart integration of sensing and control systems and other technologies. In this paper, the development of Taiwan’s smart cities is discussed from the perspective of smart manufacturing development, the concept and the current international situation are introduced, and then smart factories’ intellectual technologies, IoT, cloud computing, mass data analysis, artificial intelligence, cyber-Physical systems and Cyber security are introduced in order, and execution status of the smart manufacturing in Taiwan and its integrated manufacturing capacities are finally discussed. Under the vision of smart machine industrialization and industrial wisdom mechanization, readers are more easily to understand Taiwan’s role in the competition of sustainable development of smart cities and are expect to cultivate outstanding competitive talents.