Industrial landscape in Taiwan

Well known for its PC and motherboard production, Taiwan also ranks in top positions in all branches of the integrated circuit (IC) industry: For example, Taiwan had a 67% global market share in the integrated circuit chip contract manufacturing sector in 2008. In the same year, Taiwanese companies engaged in the design, manufacturing, packaging and testing of ICs generated revenue of nearly USD 40 billion. Worldwide market share of LCD-displays was 46% in 2008, for Mask ROM 93%, for optical storage discs 65% and in packaging (44%) and testing (63%) of ICs Taiwan was the global market leader. Taiwanese companies often work as OEM or ODM. They are well known for their quick reaction to changing market requirements as well as the constant optimization of production processes.

Five of the world’s largest producers of TFT-flat screens are Taiwan-based. Displays, LEDs, couplers, laser pick-ups and transmitters, infrared devices and image sensors will meet the demand for mobile phones, billboards, automobiles, healthcare devices and television sets. Taiwan’s domestic optoelectronics industry is expected to grow to a production value of USD 52.6 billion by 2015.  In response to industry changes, the Ministry of Economic Affairs (MOEA) has been promoting measures to help Taiwan develop its optoelectronics material industry. A three-year plan to “Increase Localization in Flat Panel Displays” was carried out from 2007 to 2009. It helped participating manufacturers to establish pilot production lines for various products, such as polyvinyl acetate film. In 2009, the four-year “Environmental Compatibility of Photoelectric Materials Plan” was launched by the MOEA to promote development of low-consumption, low-toxic, regenerative, and environmental optoelectronics materials that soon can be utilized in the LED, photovoltaics, and electronic packaging industries. In 2010, the government continued to promote the development of various new optoelectronic materials, including optical protective film, back sheets for solar batteries and low temperature conductivity material.

Taiwan is among the world's top 5 producers in the machine tools and the plastics and rubber machinery industries. Product quality and reliability, a comprehensive supply chain and cross sector industry integration resulted in more than USD 4 billion production value of Taiwan’s machine tool industry in 2008. With an annual output of more than USD 1.4 billion in 2008, the plastics and rubber machinery industries reached 7% growth over the previous year. The production value of the machinery sector was 27.1 billion in 2008. Imports from Germany in the machinery sector were USD 1.24 billion in 2009. The government estimates a growth in private gross fixed capital formation in 2010 of 14.8%. According to the Taiwan Association of Machinery Industry (TAMI) the production value of the machinery sector is expected to grow to USD 31.44 billion in 2010.

Taiwan’s government has initiated a new plan called “Diamond Action Plan for Biotech Takeoff” aiming to develop the local biotech-related industries. In 2008 the exports and imports grew 8.6% from USD 604.9 million to USD 656.8 billion. By February 2009 the Executive Yuan had approved 36 investment projects, domestic as well as overseas, for over TWD 13 billion from the National Development Fund for the biotechnology sector. By 2009, there were 39 noted biotech companies, of which 11 were publicly listed and 28 traded over-the-counter (OTC). Total sales of these biotech companies summed up to USD 1.4 billion in 2008.   

Though Taiwan is a latecomer in establishing a local market for green industries, the last years have seen improvements in formulating policies. Despite still lagging behind in terms of a local market, Taiwan’s photovoltaic industry has already become the 4th largest in terms of the worldwide exports of PV-modules. A number of internationally renowned Taiwanese companies has adopted green policies and underscored their vision of sustainability by constructing new buildings according to the US LEED standard. Apart from construction and renewable energy, water and waste management provide further business opportunities.

In June 2009, the government named six industries, the so called 6 star industries, with trillion NT-dollar business potential: biotechnology, tourism, green energy, medical care, refined agriculture and culture and creativity. These six industries are expected to become the next biggest revenue-generating businesses after semiconductor, flat panels and information and communication technologies. It is expected that jobs will be created on a big scale. At the same time the government chose twelve construction projects, the so-called i-Taiwan projects, which are expected to attract investment of USD 131.92 billion.

After having developed from a labor-intensive to a capital- and technology-intensive industrial location, Taiwan further backed its leadership in innovative industries by introducing measures to strengthen its high-/mid-technology sector. In the year 1973, the government-funded Industrial Technology Research Institute (ITRI) was established to support existing companies in the field of R&D. The idea is to stimulate synergies between the academic and industrial facilities to grant Taiwan an advance in newly developing industries. The non-profit organization has played a vital role in transforming Taiwan’s economy from a labor-intensive model to a high-tech industrial one. Major efforts are put in information and communications; material, chemical and nanotechnologies; biomedical technologies; advanced manufacturing and systems; and energy and environment. Apart from its headquarters located in Hsinchu, Taiwan ITRI has branch offices in Silicon Valley, Tokyo, Berlin, and Moscow. Over 25,000 companies a year benefit from ITRI’s industrial services. As of 2010 ITRI had more than 6,000 employees, successfully applied for more than 8,000 patents and ventured more than 150 new companies.

Four science parks and over 80 industrial parks were built in the past 30 years, to provide companies settling down in these areas with an excellent infrastructure, tax benefits and jointly managed research facilities.
 
The Hsinchu Science-based Industrial Park (HSIP) was the first of its kind to be established in the year 1980. A total of 449 enterprises, mainly involved in the semiconductor, computer, telecommunication, aviation, precision machinery and optoelectronics industries, had been established in the park by March 2010. HSIP is now one of the world's most significant areas for semiconductor manufacturing.

The Southern Taiwan Science Park (STSP), established in 2000, includes Tainan Science Park and Kaohsiung Science Park. Most of the 124 registered companies are in the precision machinery and optoelectronics segment, the remaining are distributed between integrated circuits, biotechnology, telecommunications, computer & peripherals, green energy and energy saving. In order to establish a southern technology corridor, the park is a technology station with great potential: it provides a stable water and electricity supply and is located in an area free of floods and fault lines. It furthermore combines the Yanchao University district and Kaohsiung New Township Plans to construct an R&D center for high-tech industries in southern Taiwan. The accumulated revenue for the first two months in 2010 was USD 2.74 billion.

The Central Taiwan Science Park (CTSP) was opened for business near Taichung in 2005. As of the end of 2007, a total of 92 enterprises were admitted to the CTSP. Approved investments from 26 optoelectronics industry firms, 29 precision machinery industry firms, eleven biotechnology industry firms, eight semiconductor industry firms, two computers and peripherals industry firms, one digital contents industry firm, nine research institutions and incubation centers, and six Park businesses totaled USD 51.9 billion.

In 2010 the National Science Council expects the combined revenue of the three major science parks advancing 20% to reach USD 59.28 billion.