Manufacturing in Taiwan is huge.
Take a look at any device you own: a computer, a mobile phone, a tablet. They may be from different brands, but you can be 99% certain that its parts came from the same mothership of fabrication: Taiwan.
Taiwanese companies have been a pillar in the electronic products’ global supply chain. Companies likes Apple, IBM, Dell and more have spawned billionaires such as Hon Hai’s Terry Gou and Quanta’s Barry Lam.
Taiwan produces, manufactures and designs 94% of the motherboards and laptops and half of the world’s liquid-crystal displays (LCDs). In addition, it makes about a quarter of the world’s semiconductors and has had the world’s second-largest LED industry with about a quarter of the world market and about a fifth of the world’s mobile phones.
This Asian country has maintained an admirable growth curve since its political separation from China in 1945. It is one of “The Four Asian Tigers” or “Asian Dragons” because together with Singapore, South Korea, and Hong Kong, it revolutionized the economic landscape during the mid-to-late 20th century.
One of the largest production companies in Taiwan is Acer, which is the world’s third-largest PC maker by market share. Also, Wistron Corporation and ASUSTek Computer Inc., owner of the ASUS brand, have become well-known around the world as the creator of the Eee PC, a small laptop computer with excellent internet connectivity and highly affordable price tag.
Asus is the first motherboard manufacturer in the world with almost 40% of market share (in fact, it is estimated that one in three computers have an Asus motherboard).
All of this has led to a 4.5% GDP growth per year since 1992, and Taiwan being ranked the 22nd richest country in the world.
This achievement did not happen by chance. The Taiwanese government had developed a series of policy measures over the years aimed at improving innovative business investment. Manufacturing in Taiwan gives the country its economic prowess.
But now things have changed. Things have not been so good for the Asian tiger and it may be due to its longtime rival: China.
The Pekinese government has played a major role over the last decade as one of the greatest economic revolutions in history. China devotes more than 40% of its GDP to investments aimed at transforming itself from a closed and severe economy in the 1970s to a manufacturing and exporting hub over the years. The Asian giant has achieved an economic growth averaging 10% annually. It has lifted almost half of its 1.3 billion population out of poverty and become the undisputed second-largest economy on Earth (after the United Stated). Chinese manufacturers and slowing growth have had a mixed impact on Taiwan manufacturing industry.
Jamie Lin, the founder of AppWorks, one of Taiwan’s few start-up accelerators, has a pessimistic view of the future of Taiwan: “It’s like you’re riding on the Titanic, and you know it’s going to hit an iceberg, and you’re trying to turn the rudder, but you know it’s not turning fast enough,” he said in a recent interview.
Chinese companies have gradually entered the Western market and have conquered an arena that Taiwan had undisputedly dominated.
Also the perception has changed. China has made a tremendous effort to alter the negative connotation of “Made in China.” The improved quality of their products is proven by the big corporations that have chosen it as their manufacturing base.
Another huge problem, according to Mr Lin, is the lack of innovation that made the island a tech hub in the 80s and 90s: “Immediately I realize that we’re so good at making cheap computers and phones, but we’re so bad at making an app for anything.”
Critics have also pointed out that Taiwan’s tech industry is rooted in a conservative business culture built around a now-aging first generation of high-tech industrialists. Taiwan’s tech leadership includes Morris Chang, 84, of the chip maker Taiwan Semiconductor Manufacturing Corporation, and Terry Gou, 65, the founder of Foxconn considered the Mark Zuckerberg of the island.
There have been no major structural changes in Taiwan in the last 20 years. There has been a state of maintaining what has been done in the past, but there has been no innovation or the emergence of new ideas, which break the established mold.
Nick We, the chief financial officer of Asustek said that: “Transition is not something that can be completed overnight. It takes strategic planning and solid execution, especially when our industry is undergoing a massive paradigm shift.”
Taipei’s government is facing a decisive battle and nobody knows if it can win.
It is at a serious disadvantage. Taiwan’s population is 23.52 million compared with China’s 1.357 billion. There are more people involved in China’s growing tech industry than in Taiwan.
But things are changing, and with change often comes opportunity.
Taiwan’s Industrial Technology Research Institute, or I.T.R.I. is starting an initiative linking Taiwanese companies to hardware start-ups in places like Silicon Valley that are in need of quick prototyping and manufacturing.
Manufacturing in Taiwan has to come out from the shadows of their past success, leave behind the conservative mentality and begin breaking paradigms. The Asian Tiger has to take risks, create more flexible market regulations and listen to the younger generations if they want to take the power back.
We had the opportunity to interview Bruce Bateman, Liteon CTO who demonstrated to Akuaro World some of the technological innovations being developed in Taiwan: