The digital home electronics industry has emerged as a result of development of telecommunication, home entertainment, and remote control technology during the past decade. Most leading countries in the information technology (IT) industries (i.e. South Korea, Taiwan, etc.) intended to develop the digital home electronics industry as the next dominant industry for sustain the growth of nations' wealth. Albeit the Taiwanese government has tried to develop the digital home electronics industry by investing a lot of efforts and resources through policy tools including joint specification definition as well as industrial consortium organization, the achievement is limited. To resolve this problem, the innovation policy tools should be reviewed and reconfigured. Industrial innovation requirements for developing the digital home electronics industry will first be reviewed as the criteria. Innovation policy tools will also be derived from literature review as alternatives. Then, a hybrid MADM (Multiple Attribute Decision Making) framework consisting of DEMATEL and ANP will be introduced for deriving appropriate innovation policy tools for developing Taiwanese digital home electronics industry. Experts from research and academic institutes and the Taiwanese government will be invited for defining the innovation policy. The innovation policy being derived can be used for developing Taiwanese digital home electronics industry and enhance the Nation's wealth.