ICT Seminar in Tokyo —1—
Developing High-Tech Industry through Establishing ICT Cluster
Kung Wang PhD.Prof., National Central University
Advisor, Industrial Technology Research Institute
Taiwan, R.O.C
Sep. 1, 2004
ICT Seminar in Tokyo —2—
Transition of Taiwan’s Economy and Industrial StructureA
s p
erce
nta
ge
of
GD
P (
%)
1951 1964 1971 1981 1991 2002
Agriculture Manufacturing Service
Labor-Intensive industry
Technology-Intensive Industry
Knowledge-Intensive Industry
Capital-Intensive Industry
GDP(USM$) 1,614(1952) 48,600(1982) 290,540(1999) 281,508(2002)GDP/Capita(US$) 196(1952) 2,819(1982) 13,114(1999) 12,572(2002)
Manufacturing-Led Investment-Led Innovation-Led
67%
26%
2%
46%
15%
32%
Source : Directorate-General of Budget, Accounting and Statistics, R.O.C., Monthly Bulletin of Earning and Productivity Statistics, Taiwan
ICT Seminar in Tokyo —3—
Production Value(US$M) Industry
1999 2000 2001 2002 2003 CAGR(%)
World Position (2001)
Information (Hardware) 21,023 23,081 20,124 17,443 11,864 -13.3% 4
Communications 3,645 4,322 5,076 5,230 6,240 14.3% 19
Opto-Electronics 8,328 14,000 13,104 18,026 17,449 20.3% 3
IC 13,234 22,434 15,054 18,864 23,551 15.5% 4
World Position of Taiwan’s IT Industry
Exchange rate for 2003: US$1.00 = NT$35.00. Figures do not include overseas output (e.g. China)
Source:MIC,IEK (2004/02)
ICT Seminar in Tokyo —4—
35.3%
72%
34%35.5%
26.8%23.6%
19.4%
66%
36.4%
9.7%
0
10
20
30
40
50
60
70
80
Mic
roco
mpute
r
Color C
RT
Mai
nboard
Switch P
ower S
upply
Term
inal
Mono C
RT
Keyboar
d
Graphic
Car
d
Mouse
Scanner
441
10,500
5,90010,370
3,1291,394
8,499
4,530
5,105
2,295
Data Source: IEK, ITRI (2001/10)
Taiwan Electronic Products Worldwide Market Share in 1990 Unit: thousand unitsmarket Share (%)
ICT Seminar in Tokyo —5—
market Share (%)Unit: thousand unitsTaiwan Electronic Products
Worldwide Market Share in 2002
Data Source: IEK, ITRI (2003/08)
39463
18,380
58732
84675
2880
1348210450
57742774 1996 2764
98008%23%57%
64%80%
7%
38%
23%
30%
67%
51%39%
0
20000
40000
60000
80000
100000
0%
20%
40%
60%
80%
100%
ICT Seminar in Tokyo —6—
1997 1998 1999 2000 2001 2002 COUNTRY
patent rank patent rank patent rank patent rank patent rank patent rank
U.S. TOTALS
61,707 1 80,291 1 83,905 1 85,072 1 87,610 1 86,977 1
Japan 23,179 2 30,840 2 31,104 2 31,296 2 33,224 2 34,859 2
GERMANY 7,008 3 9,095 3 9,337 3 10,234 3 11,261 3 11,277 3
TAIWAN 2,057 7 3,100 7 3,693 5 4,667 4 5,371 4 5,431 4
FRANCE 2,958 4 3,674 4 3,820 4 3,819 5 4,041 5 4,035 5
UNITED KINGDOM
2,678 5 3,464 5 3,572 6 3,667 6 3,965 6 3,838 6
SOUTH KOREA
1,891 8 3,259 6 3,562 7 3,314 8 3,538 8 3,766 7
China 81 25 160 22 155 22 179 23 237 22 289 21
Source:Indicators of science and technology Republic of China,NSC
Remarks: Patents per capita, Taiwan ranks no.2 in 2001
U.S. Patents Granted
ICT Seminar in Tokyo —7—
Human Resource Development• Provide on-the-job training • Promote cooperative work/ study education exchange programs• Recruit overseas talent
Human Resource Development• Provide on-the-job training • Promote cooperative work/ study education exchange programs• Recruit overseas talent
Infrastructure
• Develop industrial parks• Found incubation centers • Establish NII (National information Infrastructure)
•Support market and Technology forecast study
Infrastructure
• Develop industrial parks• Found incubation centers • Establish NII (National information Infrastructure)
•Support market and Technology forecast study
Financial Means•Tax incentives• Encourage venture capital investment• Invest government funds• Provide low-interest loans
Financial Means•Tax incentives• Encourage venture capital investment• Invest government funds• Provide low-interest loans
Technology Support
• Strengthen R&D systems• Subsidize R&D,SBIR• Promote international cooperation and strategic alliances
Technology Support
• Strengthen R&D systems• Subsidize R&D,SBIR• Promote international cooperation and strategic alliances
Industry
Government Development Strategies for the Hi-Tech Industry
ICT Seminar in Tokyo —8—
Providing the Infrastructure
Establish Science-based Industrial Parks• Provide the infrastructure for the development of hi-technology industries
Establish Science-based Industrial Parks• Provide the infrastructure for the development of hi-technology industries
Establish Processing Zones• Attract Foreign direct investments • Develop external trade.• Introduce state-of-art technology and increase employment opportunities
Establish Processing Zones• Attract Foreign direct investments • Develop external trade.• Introduce state-of-art technology and increase employment opportunities
Create Incubator Centers• Offer assistance to technology-oriented entrepreneurs
and business Start-ups
Create Incubator Centers• Offer assistance to technology-oriented entrepreneurs
and business Start-ups
Develop Software Parks• develop the niche products for the world market
Develop Software Parks• develop the niche products for the world market
Promote Research Parks • Provide innovative mechanisms through cooperation
between R&D centers, universities and industries
Promote Research Parks • Provide innovative mechanisms through cooperation
between R&D centers, universities and industries
Initiating Industrial Cluster
Enhancing Technology Innovation Capacity
ICT Seminar in Tokyo —9—
3C Gorwth in Taiwan
Sources:STIC(2003), this study.
Output Valuein 1991
(NT$ thousand)
Averageemployees
in 1991
OutputValue in
2001(NT$ thousand)
Averageemployees
in 2001
AverageAnnualRates of
Increase inOutput
AverageAnnualRates of
Increase inEmpolyees
TaipeiCounty
198,178,959 35.62 763,554,018 41.55 28.53 1.66
Taoyuan 163,020,240 67.70 416,864,910 59.09 15.57 -1.27TaipeiCity 89,796,271 38.27 410,168,778 74.82 35.68 9.55
HsinchuCity
50,721,250 37.46 310,107,786 154.26 51.14 31.18
HsinchuCounty
54,093,673 61.71 289,682,046 156.14 43.55 15.30
Kaohsiung
76,498,711 146.41 190,711,551 140.63 14.93 -0.39
Taichung 35,289,951 35.04 54,309,389 31.02 5.39 -1.15
ICT Seminar in Tokyo —10—
100238 4501737
24433406
6706
11565
13664
29,804
25,244
0
5,000
10,000
15,000
20,000
25,000
30,000
'83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03
GROWTH OF SALES in HSIPGROWTH OF SALES in HSIPUS$ Million
Taiwan’s “Silicon Valley” organized and administered by NSC Taiwanese home-grown firms
ICT Seminar in Tokyo —11—
Sales by Industry in Hsinchu Science Park
Computers &Peripherals
72%
IC14%
PrecisionMachinery &
Materials1%
Biotechnology1%
Optoelectronics3%
Telecom9% Computers &
Peripherals42.0%
IC43.3%
PrecisionMachinery &
Materials1.3%
Biotechnology0.2%Optoelectronics
2.8%
Telecom10.4% Computers &
Peripherals15.7%
IC65.8%
PrecisionMachinery &
Materials0.7% Biotechnology
0.2%Optoelectronics11.0%
Telecom6.6%
1988:$1.74 Billion
1993:$4.84 Billion
2003:$25.2 Billion
Source: Science Park Administration(Feb,2004)
ICT Seminar in Tokyo —12—
3C Output Value in Taiwan (1991)
Sources:STIC(2003)
ICT Seminar in Tokyo —13— Sources:STIC(2003)
3C Output Value in Taiwan (2001)
ICT Seminar in Tokyo —14—
Development of HSIP1974 2003
Deliberation Establishment Burgeoning
1980 1995
•Established ITRI in 1973•ITRI established the EIRC• Transfered technology from Texas Instruments, Philips, RCA, IMR,…etc..•Established the HSIP in 1980
•The spin-off enterprises of ITRI got into HSIP•The capital was guided to high-tech industries by policies•Recruited the high-tech talents by policy•The IT industries raise the finance through the stock market•Venture capital was getting more important since 1990
•Government stimulate high- tech industries by offering various concessions•The area of SIP expanded to Chunan, Tungluo and Tainan•The firms was stimulated to do independent R&D by a reward system
ICT Seminar in Tokyo —15—
Current Status of HSIP
Industry Enterprises Employees Capital(Billion NT dollars)IC 136 60,459 695.6
PC and peripheral 50 12,813 106.6Communication 60 6,869 34.2Optoelectronics 56 16,939 116.8
Precision machinery 15 893 4.2Biotechnology 18 712 3.3
Total 355 98,685 960.7
Industry Distribution in HSIP (by December 2002)
4% 7%
89%
Privatesectors
Government
Overseasinvestments
Fund sources of park enterprises (by July 2003)
25%
28%22%
18%
1% 6% College
Senior HighSchoolBachelor
Master
PhD
Other
Human resource distribution in HSIP(by July 2003)
Features of HSIP•Vertical disintergration in IC industry•SME dominant•Highly centralized information electronics industry
ICT Seminar in Tokyo —16—
The Network---Talent and Technology Network
HSIP
ResearchInstitutes
Technology Transfer
Spin-off
Strategy Alliances
Open Lab/Incubators
IndustrialAssociations
TSIA
TEEMA
AAISIP
TheReturnees
ICT Seminar in Tokyo —17—
Infrastructure1980 Established the Park Administration2001 Rules of Application for Admission to Science-based Industrial Park for Service Industry
Capital1978 The tax of stock exchanged was cut to half1980 The liberalization of interest rates1983 The liberalization of capital market and full deregulation of control over foreign exchange1983 Venture Capital Management Rules1983 Investment Encouragement Statues1985 The government appropriated a seed fund amounted to NT$800mn1984 The liberalization of finance1989 The tax of stock income was released1991 The government appropriated a seed fund amounted to NT$1600mn
Policy on HSIP
Talent and Technology1950 Rules for Career Counseling for Returnees1955 Returnees Career Program1955 Rules for Job Application and Assignment for Returnees1969 Rules for Career Counseling for Returnees1971 Rules for Recruiting Oversea Talents 1973 Established ITRI1980 Established HSIP1983 Advanced Level Technical Talents Cultivation and Recruitment Reinforcement Program1985 Rules for Encouragement and Guidance of Science and Industrial R&D Talent Cultivation and Internship in HSIP2000 Rules for Tax Deduction with Investments in R&D and Personnel Cultivation
ICT Seminar in Tokyo —18—
ITRI-Innovation Engine
ICT Seminar in Tokyo —19—
ITRI: Key Factors in its Relationship to Taiwan’s High-Technology Development
Major Government research funding An intensively interactive partner to local industry A mechanism for disseminating technology and
information to industries, and speed up commercialization of technology
The role of researchers and managers technology leaders / industrial leaders resource of talented people
Encouraging entrepreneurship
ICT Seminar in Tokyo —20—
ITRI played a significant role to upgrade Taiwan as a powerful player
• establish the foundations of Taiwan’s semiconductor industry– spin off the United Microelectronics Corporation (UMC) in 1979– spin off the Taiwan Semiconductor Manufacturing Company (TSMC) in
1987
• make breakthroughs in Flat-panel Display technologies– 7 local TFT LCD makers and 4 color film makers were established– with investment of some US$ 3 billion– has reached the world-class level
• support the Information Industry– started development of a basic input-output system (BIOS) for IBM
compatible PCs– powers Taiwan to become the world’s fourth largest producer of
information industry products in 2001– with a total output value of US$ 359.73 billion
ICT Seminar in Tokyo —21—
Tech. Development stages of IC Industry in Taiwan
4 key milestones
UMC→first IC firm established
TSMC→foundry
Vanguard→own-brand DRAM
SoC Alliance→innovation oriented
UMC 80→ ERSO(5-3.5um), RCA
TSMC 87→ ERSO (1.5-1um)TI-Acer 87→ TI, IBMWinbond 87→ Toshiba Mosel 87→ SiemensMXIC 89→ MatsushitaVanguard 94→ ERSO (0.35um), EtronPowerchip 94→ MitsubishiNan Ya 95→ Oki, IBMProMos 96→ SiemensWSMC 98→ Winbond, ToshibaWinbond 02→ Infineon(0.11um)Powerchip 03→ Elpida (0.1um)
main tech source ERSO/ITRI
ERSO/ITRI IC
FoundryIDM
DRAM
SoC Design Center
Importing → Own tech R&D→ International alliance
ICT Seminar in Tokyo —22—
K.S.F. for Taiwan IC industry
• Government policy– R&D: ITRI– HSIP
• Continuous investment in capital spending and R&D– Long-term and reliable capital sources
• Skilled human resource• Innovative Business model
ICT Seminar in Tokyo —23—
Challenge-industry transformation
• Mainland China becomes Manufacturing Center• Over 60% IT Production in China is contributed by Taiwan companies
Taiwan($17.4B)
36%
47%
Others 17%
Mainland China
2002($48.3B)
Worldwide Distribution of Manufacturing of Taiwan IT Industry-B
y Revenue
Source: ITRI (2003/10)
2003($57.1B)
Worldwide Distribution of Manufacturing of Taiwan IT Industry-B
y RevenueOthers($9.1B)
16%
MainlandChina($36
B)63%
Taiwan($12B)21%
ICT Seminar in Tokyo —24—
Hsinchu ChallengeFacing the transformation to China, instead of maintaining
our manufacturing advantage, it is needed for Taiwan to
keep upgrading itself and transform into a design and R&D
center, to maintain design and technology R&D with high
added value.
To cultivate of high-tech talents and to create a good
environment for investment, to attract high-tech talents
return Taiwan are urgent tasks.