Taiwan's Technology Industry Marks Global Success

Taiwan's information and communications technology (ICT) companies play a key role in the global supply chain for electronics products. Taiwanese companies account for about three-quarters of the world's production of PCs and half of the world's liquid-crystal displays (LCDs). In addition, Taiwan makes about a quarter of the world's semiconductors and about a fifth of the world's mobile phones. Overall, Taiwan has carved out a huge niche in the global ICT industry.

The Economist Intelligence Unit (EIU) announced the results of a global study of IT industry competitiveness last year. Based on the study, Taiwan's IT industry rose to second place from sixth place in the previous year out of a total of 66 nations included in the study. The report noted that Taiwan's rise in the rankings owed mainly to its strong performance in R&D, particularly regarding patented technology.

The Taiwan ICT industry has grown to a size that has resulted in substantial diversification, and many large companies have separated manufacturing units from branded operations in order to allow greater specialization in both of these areas. The close physical proximity of companies in Taiwan has led to the formation of industrial clusters that offer distinct advantages, making Taiwan an excellent one-stop shop for procurement, design support and rapid commercialization of product ideas.

One example is Acer Inc., which in the last five years has grown to become the world's third-largest PC maker by market share. The company no longer does manufacturing in-house and spun off its production units into separate companies including Wistron Corporation. Wistron now handles manufacturing for a wide range of companies including some of the best known brands in the notebook computer business. Many other companies in Taiwan are taking the same direction.

ASUSTek Computer Inc., owner of the ASUS brand, has become familiar to many around the world as the creator of the Eee PC, a small laptop computer with excellent internet connectivity that is affordable to a larger group of the world's people. ASUSTek last year spun off some of its manufacturing operations into a separate company called Pegatron Corp.

D-Link Corp., one of the world's largest network equipment companies, several years ago spun off its manufacturing arm as Alpha Networks Inc. and focused on building the D-Link brand.

Taiwan companies are also among the world's leaders in products that save energy and reduce carbon emissions. These include companies making light-emitting diodes (LEDs) and solar cells, both of which were among the fastest-growing segments in Taiwan's ICT industry last year.

Taiwan has the world's second-largest LED industry with about a quarter of the world market. LEDs reduce energy consumption by emitting light from a chip rather than an incandescent filament in a light bulb or charged gases in a fluorescent light tube. LEDs use about a tenth of the energy of an incandescent bulb and can last a decade or longer. They also produce almost no heat, thereby reducing fire potential. LEDs are poised to take a larger portion of the multibillion-dollar market away from light bulbs and tubes as the new technology becomes more mature and manufacturing costs fall.