Industrial landscape in Taiwan
IT and IC manufacturing
Well known for its PC and motherboard production, Taiwan also ranks in top positions in all branches of the integrated circuit (IC) industry: IC industry turnover in 2014 in Taiwan reached EUR 33 bn., which is 22.5% of the global turnover, making Taiwan the market leader. Taiwan also ranks first in IC Packaging and Testing and ranks second in IC Design only after the US, and growth here is expected to increase by more than 21%. Generally Taiwan exports almost twice as much as it imports, but this relationship is reversed for Germany. Germany’s exports to Taiwan reached 14.5 bn. TWD in 2013, compared to 12.2 bn. TWD imports, but in 2014 Taiwanese imports from Germany have doubled (490 mil. USD to 983 mil. USD), making Germany seventh place. In the first half of 2015, imports from Germany have already reached 452 mil. USD. Taiwanese companies also continue to invest strongly in new equipment. Taiwan Semiconductor Manufacturing Corp. wants to invest between 10.5 and 11 bn. USD in 2015, UMC, Taiwan´s second biggest manufacturer in the sector wants to invest 1.8 bn. USD. In total the 16 wafer and chip companies invested ca. 467 bn. TWD in 2015. Taiwanese companies are well known for their quick reaction to changing market requirements as well as the constant optimization of production processes.
Two of the world’s top five display companies are located in Taiwan, but the industry is having difficulties. Competition from China increases and excess supply especially of LCD technologies, this trend is likely to continue. Taiwanese manufacturers dominate the LCD-display market, but supply has decreased by 10.9% in 2015, compared to 2014. However, Taiwan still had a 65% share, which has even increased from the year before. Taiwan’s LED sector can expect a more positive outlook for 2015 and the relatively young sector of motor vehicle LEDs in particular is expected to grow on average 9% annually until 2018 and reach 2.5 bn. USD. Taiwanese companies need to increase capacities and efficiency. Everlight Electronics will increase capacities by 25% over the next three years with 10 bn. TWD, which they might increase to a total of 30 bn. TWD over the next five years. Epistar increased its capacities with fusions and acquisitions. It most recently acquired TSMC Solid State Lighting in 2015 and acquired or fused with six competitors in the years before. Hon Hai Precision Industry (Foxconn) acquired Sharp to gain more know-how in displays and acquired a controlling share of Innolux Corp., the third-biggest display provider. Hon Hai wants to use these to move quickly into the organic LED market, which is growing quickly. The deal with Sharp will also make Hon Hai one of the biggest providers of displays for cars, with an annual turnover in 2015 of UD 7.2 bn.
Machinery and machinery tooling
Taiwan is among the world's top 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 are some of Taiwan biggest advantages. In 2015 the import value of plastics machinery decreased by 17.6% to 226.4 mil. USD, but in the first half of 2016 it increased by 37.7% compared to the year before. Similarly, imports from Germany have decreased by 11.6% in 2015 and increased by 70% in the first half of 2016, reaching 19.8 mil. USD. Production value decreased slightly between 2012 and 2015 from USD 48.6 bn. to 43.3 bn., but are expected to increase again by 8% to 47 bn. Taiwan ranks sixth in the world in exports, but they decreased by 20.8% in 2015 and 11.2% in the first half of 2016, because exports to China slowed dramatically, and growth of exports to other countries, such as Vietnam (increased by 15.9%) could not fully compensate. The machinery sector is expected to decrease turnover by 2% in 2016, but the numbers vary in different sectors: tool machinery sector expects to increase production in the 2nd half of 2016, and automation and high precision equipment is also expected to increase thanks to the focus on smart machinery and automated factories.
Taiwan aims to become a biotech hub in Asia, but is still dependent on imports of many biotech products, such as Western pharmaceuticals. The sector has always been backed strongly by the government, and the new government has continued its support. Taiwan’s Bioeconomy Industry Development Program expects to increase the production value of biotechnology, including medical technology and pharmaceuticals, to reach 500 bn. TWD (USD 15.6 bn.) by 2020. In 2015 the production value was TWD 300 bn., an increase of 3.5% from the year before. In 2015, private investments reached TWD 48.5 bn., 5.9% more than in 2014. Turnover of applied biotech companies, excluding pharmaceuticals and medical technology, reached TWD 88.4 bn. in 2015, an increase of 7.5%.
Even though Taiwan’s photovoltaic industry has already become the 2th largest in terms of the worldwide exports of PV-modules, Taiwan is a latecomer in establishing a local market for green industries. However, the last years have seen improvements in formulating related policies. The government plans to have renewable energy account for 20 percent of electricity generated by 2025 when nuclear power should be phased-out. In particular, the power capacity of solar installations will be increased to 20 gigawatts (GW), with 3 GW generated by rooftop-mounted panels and 17 GW by ground-mounted panels. 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.
Focusing its core values of innovation, employment, and equitable distribution, President Tsai created a new model for Taiwan´s economic growth during the forthcoming years and plans to promote five major innovative industries. These include green energy, biotechnology, smart machinery, national defense, and the establishment of an Asian Silicon Valley. Creating a good ecosystem for these five industries will stimulate the upgrading and transformation of Taiwan's economy.
Furthermore, Taiwan's main focus is on the improvement of its talents and its industrial competitiveness. The government has chosen ten key industries to promote foreign talent recruitment. These ten industries are: productivity 4.0, advanced manufacturing equipment, advanced electronics, integrated applications in smart systems, 5G and advanced communications, biomedicine and medical devices, renewable energy, innovative product design and user experience, innovation and advanced research and development, and international financial services.
Industrial Technology Research Institute (ITRI)
The Industrial Technology Research Institute (ITRI) was founded in 1973 as a nonprofit government-funded R&D organization and has since then been engaging actively in applied research and technical services. The idea was to stimulate synergies between the academic and industrial facilities to give Taiwan an edge in newly developing industries. ITRI has played an important role in transforming Taiwan’s economy from a labor-intensive to a high-tech industrial one, as it is the place of origin of numerous well-known high-tech companies in Taiwan, such as the leading companies in the semiconductor industry TSMC and UMC. Major efforts are put into the fields of information and communications, electronics and optoelectronics, material, chemical and nanotechnology, medical device and biomedical, mechanical and systems, green energy and environment. Apart from its headquarters located in Hsinchu, ITRI has branch offices in Silicon Valley, Tokyo, Berlin, and Moscow and it is pursuing worldwide cooperations with major international companies. Over 15,086 companies a year benefit from ITRI’s industrial services. Employing about 5680 researchers and holding more than 23,000 patents, ITRI is the largest R&D organization in Taiwan.
location, Taiwan continues to strengthen its leadership in innovative industries. In the past 30 years three major science parks and over 80 industrial parks have developed into technology-intensive industrial locations and backed Taiwan’s leadership in innovative industries. Through an excellent infrastructure, tax benefits and jointly managed research facilities, companies are provided a first class area for settling down. To strengthen its high-/mid-technology sector, Taiwan specializes in cost-competitive technological products which makes it an attractive location for R&D and gives Taiwan a distinctive competitive advantage. In 2007, the High-Speed Rail connection between Taipei and Kaohsiung with major stops in Hsinchu, Taichung, Chiayi and Tainan began operation. Offering a good connection between the major science parks, the HSR has contributed to establishing high-tech settlements with an intense network of suppliers. German companies like Merck, Evonik and Linde are successfully pursuing R&D in the vicinity of a science park in Taiwan, a proof of Taiwan´s potential in this field.
Hsinchu Science-based Industrial Park (HSIP)
The Hsinchu Science-based Industrial Park (HSIP) was the first of its kind to be established in the year 1980. More than 520 companies employ more than 150,000 people here, mainly involved in the IC, optoelectronics, computer, telecommunications, precision machinery and biotechnology industries. Comprising six different locations, the HSIP covers 6.5-square kilometer. HSIP is now one of the world’s most influential areas for semiconductor manufacturing and companies generated annual average revenues of more than USD 31.9 bn.
Central Taiwan Science Park (CTSP)
The Central Taiwan Science Park (CTSP) was opened for business near Taichung in 2005. As of July 2016, 184 companies, 8 incubation centers, and 6 research units had set up operations there. The Central Taiwan Science Park has attracted investments from firms from the industries of optoelectronics, precision machinery, biotechnology, integrated circuits, and the computer and the peripherals industry. In 2015, the combined revenues of all tenant companies arrived at USD 15.7 bn.
Southern Taiwan Science Park (STSP)
The Southern Taiwan Science Park (STSP) was established in 2000 and includes Tainan Science Park and Kaohsiung Science Park with a total area of 1,608 hectares. 387 approved companies were operating in the fields of optoelectronic, precision machinery and biotechnology industry in 2015. Other companies are operating in the field of integrated circuits, telecommunication and computer peripherals. Remarkably, the leading companies in the field of semiconductors TSMC and UMC chose to increase production capacity investing an amount totaling USD 24.8 bn. in 2012. The Southern Taiwan Science Park recorded an overall annual sales volume of approximately USD 22,8 bn. in 2015.
Together, the three major science parks, HSIP, CTSP and STSP achieved revenues of round about USD 70 bn. in 2015. The science parks have been able to profit from the increasing popularity of smartphone devices and tablet PCs. Strong demand for optoelectronic devices has also been a driving force for increasing revenues. In addition to its high degree of innovation, Taiwan’s science parks are also important employers, with a total of 265,091 workers in 2015 and plans to increase employment further in order to react to the increasing demand of technological products.
Last update: September 2016