Friday, August 04, 2006
SUSIE GHARIB: Not long ago, the island nation of Taiwan produced almost four out of every five of the world`s laptop computers. Today, almost four out of every five of the world`s laptops come from mainland China. That statistic demonstrates a shift in manufacturing that is taking place now in Taiwan as more and more high-tech industries migrate their businesses to the mainland. As Rian Maelzer reports, the changes are forcing Taiwan to look for new ways to stay competitive in the global marketplace.
RIAN MAELZER, NIGHTLY BUSINESS REPORT CORRESPONDENT: It`s not your average vocational training program. This course gives hands-on experience in making silicon wafers for Taiwan`s semiconductor industry.
CHOU KAN-SEN-TZE-CHENG FOUNDATION OF SCIENCE & TECH.: Our foundation actually is trying to fill the gap between university education and real industry requirements or their needs.
MAELZER: It`s one way Taiwan is looking to keep its edge over China and the semiconductor industry is one in which Taiwan does still clearly hold such an edge. Producing flat panel LCD displays, particularly large ones, is another sector in which Taiwan still leads China. But for how long?
HU SHENG-CHENG, CHAIRMAN, COUNCIL FOR ECONOMIC PLANNING: Their top engineers are as good as ours or even could be even better. But we have a certain advantage. One is that we have a better sense of the market.
MAELZER: Taiwan has also learned how to harness science to help industry bring products to the market. Take the industrial technology research institute. It was the birthplace of Taiwan semiconductor, or TSMC, now the world`s largest contract chip maker.
I-CHING WU, INDUSTRIAL TECHNOLOGY RESEARCH INSTITUTE: We spin off new companies like TSMC and we continue to do so. And we also develop technology and transfer it to industry to help them continue to expand their business. In addition to that, we take on contract services from the industry as they need technology solutions.
MAELZER: The institute`s 6,000-strong staff is now working with industry to develop fields Taiwan hopes will lead the island into the future, like nanotechnology, biotechnology and solar energy. And analysts say Taiwan can still fill a niche in sectors like consumer electronics by producing critical, high-end components such as LCDs and memory for computers that are now being assembled in China. But as contract manufacturers, most Taiwanese companies are not maximizing their returns. Very few Taiwanese companies have taken the big step to manufacturing and marketing under their own brand names and the government and economists would like to see a lot more of that. More Acers and more Benqs (ph). Analysts say that to stay competitive, companies here also need to combine the island`s strengths in R&D, design and high-tech manufacturing with responsiveness to the market`s needs, like Taiwan Semiconductor does.
GARY CHIA, YUANTA PACIFIC SECURITIES: I look at TSMC as as much of a service company as it is a manufacturing company because the logistics it provides. The ease of which their customers can use their service has no parallel.
MAELZER: Still, some feel there`s a danger of exaggerating the challenge China poses to Taiwan industry.
HU SHENG-CHENG: Our concern should be in competition with Korea rather than with China. China will still behind us at least five to 10 years, but they are moving very rapidly.
MAELZER: Something government and industry here seem acutely aware of, that Taiwan can`t afford the least bit of complacency if it`s going to remain one of Asia`s economic success stories. Rian Maelzer, NIGHTLY BUSINESS REPORT, Taipei.