Discussion in 'China' started by Martian, Apr 30, 2016.
TSMC Dwarfs Foundry Rivals | Electronics Weekly
Taiwan's TSMC crushes Samsung in semiconductor foundry business.
When you look at the sales chart closely, you will see that Taiwan TSMC's sales rose from $20 billion to $26.5 billion in the two year period from 2013 to 2015. TSMC gained $6.5 billion in annual sales.
Over the same time, Samsung's foundry business fell from $3.5 billion to $2.5 billion. Samsung lost $1 billion in annual sales.
The conclusion is inescapable. TSMC is crushing Samsung in the semiconductor foundry business.
@Martian Can you explain why Taiwan such big industrial giant ?Does the government support the industry or they follow a different business model ?
There are a few keys to Taiwan's success in the high-tech sector.
Firstly, Taiwan's ITRI was founded in 1973. ITRI is a quasi-government organization to support research and development. This is logical. As a small country, Taiwan needs to collect and focus its combined energies to develop high technology.
It is more important to have one large organization with the resources to pursue R&D than to have numerous small organizations/corporations that dilute their resources on duplicative efforts.
ITRI is famous for spinning-off TSMC and UMC. UMC is famous for spinning-off MediaTek.
Secondly, Taiwan is very different from Japan and South Korea. Taiwan has a bottoms-up system. Many small Taiwanese start-ups pursue a diverse field of technologies. The market decides which new product survives.
The Taiwanese business ecosystem is pretty straightforward. You start with a pool of little tadpoles. The ones that survive grow into medium-sized technology companies. Over time, some of the medium-sized companies grow into profitable billion-dollar tech companies.
Japan and South Korea use a top-down system. With the Japanese keiretsu or the South Korean chaebol, management decides on the technological fields and products that will receive investment. This means the keiretsu or chaebol is usually late in entering a business sector.
For example, TSMC created the foundry business in 1987. Samsung didn't enter the foundry business until 2006, because it took 20 years for the foundry segment to grow into a massive business. Thus, in the majority of cases, Samsung will always be years behind Taiwanese pioneers.
Today, Taiwan's Andes Technology Corporation is probably the new TSMC. For the last ten years, Taiwan's Andes Technology has been designing CPUs. Their latest version has over 2 billion transistors. I don't think Samsung will ever catch up to Taiwan's Andes Technology in the future. It is difficult to match another company's product when it's been refined over ten years (in Andes Technology's case) or twenty years (which happened with TSMC's library of design tools and manufacturing expertise for high wafer yield).
Thirdly, Taiwan's small tech start-ups are constantly experimenting with new technology. Taiwan was the first in the world to develop a headset that allowed for virtual pressing of telephone buttons suspended in the air.
Taiwan's business model has proven superior to Japan's keiretsu and South Korea's chaebol. The Taiwanese government supports basic research up to a point with ITRI. After the technology looks viable, it is spun off into corporations that further develop the technology into commercial applications.
I should mention that the South Koreans are no dummies. Three years after the establishment of Taiwan's ITRI, the South Koreans quickly established their own ETRI in 1976.
Taiwan's model of a government-supported technological seed and further development by the commercial sector has proven very successful. The rigid Japanese keiretsu has proven to be a failure over the long term. The jury is still out on the South Koreans. Can the South Koreans move away from the rigid chaebol model? If they can't, they will share Japan's fate. TSMC proves that South Korea's Samsung is being outclassed.
Samsung Buys Its Way Into Foundry Business | EDN
Thanks ,I read about the Japaneses ,Korean and Ford model of business and the pro and cons .Are the working habits (max no of working hr per day, lower rank leadership etc) more healthy in Taiwan as they lack in Japan and South Korea.Also is there a debt problem or not in Taiwan .
You bring up a good point. South Korea is highly leveraged. The problem with a chaebol or keiretsu is that it enters many large existing business sectors in the hope of gaining market share. This requires a huge amount of capital. Thus, during the Asian financial crisis of 1997, South Korea had to borrow $57 billion from the IMF.
Taiwan had no need to contact the IMF. Taiwan is a cash-rich country with ample financial resources. Small Taiwanese companies do not require a large amount of capital. Only profitable Taiwanese companies survive. Unlike South Korea, the Taiwanese government does not offer a financial lifeline to Taiwanese companies.
The Taiwanese government was thinking about offering financial help to Powerchip. However, the American government objected on antitrust grounds. For the moment, we'll just ignore the fact that the US government bailed out AIG and GM. In the end, the Taiwanese government never offered any financial help to Powerchip. In Taiwan, a company either sinks or swims on its own.
MAY 26, 2015 @ 02:01 PM 12,586 VIEWS
Taiwan Is A Model Of Freedom And Prosperity
Daniel Runde ,
Asia’s tiger economies, but also provided an economic model that has been successfully replicated by other regional economies. In parallel with this economic evolution, Taiwan began a process of political transformation that led to three decades of Democracy.
Taiwan’s success—from an underdeveloped and resource poor island, to a regional economic powerhouse with a multiparty democratic system—comes from its national commitment to investing in its people. While other factors certainly played a role in prompting Taiwan’s transformation, including effective trade and financial policy, Taiwan has established itself as a dynamic and technology oriented economy by improving its base of human capital. Without mineral, carbon, or agricultural wealth, Taiwan recognized that its people were its most valuable national resource. Today, Taiwan has a human development index score that is comparable to France’s and GDP per capita levels similar to Germany.
A picture of Taipei’s skyline at night, featuring Tapei 101, which was the tallest building in the world until 2007.
This success did not come without some help. From 1950-1965, U.S. foreign assistance to Taiwan averaged 6.5 percent of Taiwan’s GDP, and achieving a high level of economic growth in Taiwan was considered a US national security priority. Following the end of WWII the US supported Chiang Kai-shek, even after the Communists expelled him from the mainland. The United States provided significant development and defense assistance, including the capital goods, industrial materials, and human capital needed to transform Taiwan into a modern industrial economy. By the 1970’s, Taiwan had joined South Korea and Japan as Asian economic dynamos whose reconstructions were underwritten by the United States.
Taiwan provides a compelling development story, but the relationship between the United States and Taiwan began in the context of the broader Cold War. During the first few decades of US support Taiwan’s political system was closed and authoritarian. Chiang Kai-shek’s Kuomintang (KMT) party maintained tight political control, and it was not until the 1980’s under Chiang Kai-shek’s son Chiang Ching-kuo that Taiwan began its process of political liberalization. Taiwan saw its first opposition party President in 2000 with the election of Chen Shui-bian of the Democratic Progressive Party (DPP), followed by another democratic transition of power when KMT candidate Ma Ying-jeou assumed the office in 2008.
Because of tensions with the People’s Republic of China (PRC), only a handful of countries maintain official diplomatic ties with Taiwan. Taiwan’s dominant political issue is cross-strait relations, and its political parties are rhetorically divided over reunification versus independence. While a strong majority of Taiwanese citizens favor maintenance of the current status quo with China, a détente the United States has supported since the 1970′s, Taiwan’s position between China and the United States is only becoming more precarious.
Taiwan has Presidential elections in 2016, and while the KMT is sorting out who to field as a candidate, it appears increasingly likely that the DPP will win. The DPP has historically favored Taiwanese independence, and election rhetoric will undoubtedly stir debates around Taiwanese national status that will draw close attention from the Mainland. Public opinion in Taiwan (and the threat of Chinese retaliation) make direct moves towards independence extremely unlikely.
Taiwan’s position is changing in the context of growing economic ties to mainland China and the United States’ official rebalance to Asia. Taiwan wants strong signals of support from the United States. One way we could support Taiwan would be to include them in the Trans-Pacific Partnership (TPP). Taiwan is not currently part of the agreement, and it will be hard to include them at this juncture, but we should be prepared to open the door to future membership.
TPP membership will require an uphill climb, partially because Taiwan has consistently disappointed the United States on trade related matters. High profile disputes over barriers to U.S. pork and beef have been sticking points in trade relations, and make Taiwan’s inclusion in the already politically fraught trade deal more difficult. This is without mentioning complications associated with Chinese political opposition, which (even if managed effectively) would necessitate including Taiwan as a signatory “economy” as opposed to “country”. Taiwan is going to have negotiate in parallel to the on-going TPP process and demonstrate willingness to make significant compromises before it will be allowed to join.
As China becomes wealthier and more powerful, the space in which Taiwan can operate economically, diplomatically, and otherwise, is shrinking. Countries are hesitant to openly embrace Taiwan for fear of economic reprisal from China. Taiwan is also more economically enmeshed with China than ever— in 2014 cross-strait trade was approximately $200 billion. Regardless of the changing global landscape for Taiwan, the US should also look to maintain close ties with Taiwan, and can leverage Taiwan’s relationship with the mainland as a means of improving our own diplomacy.
Over 3 million mainland Chinese tourists came to Taiwan last year to see Chinese cultural treasures brought by the KMT as they left China, and now located in the National Palace Museum in Taipei. Mainland visitors go back to their hotels and watch Taiwanese political talk shows and see open political debate and open criticism of Taiwan’s leaders. They see freedom of religion, speech, association, and political competition along with economic prosperity. Most of all, they see that these liberties are not at odds with Taiwan’s Chinese cultural identity. Taiwan is a vision of China we should all wish for, and living proof that China can achieve its goals of growth and stability in a politically pluralistic setting. It’s important that this model continues to stand, and Taiwan maintain status quo until possibility for reconciliation that does not threaten democracy there.
In the early 1980s, the Taiwan government listed the biotechnology industry as one of its industrial development priorities. At that point it began to vigorously promote research in related industries, as well as encouraging overseas Chinese scientists to return to Taiwan to offer their experience and expertise to the nation.
Since that beginning, research budgets for life sciences have increased dramatically. In 2002, the government allocated US$495 million to bioscience research and development--29 percent of the total national science budget--and an increase of 46 percent over the previous year's US$339 million.
For the total amount budgeted between 2000 and 2002, the funds were allocated as follows: 30.4 percent to the R&D budget of the National Science Council, 20.4 percent to the Department of Health, 16.1 percent to the Ministry of Economic Affairs--whose major task it to promote local industries--21.6 percent to the Council of Agriculture, and 11.5 percent to Academia Sinica.
National Research Programs
Life-science focused national development programs initiated by the government now include the National Research Program for Genomic Medicine, the National Science and Technology Program for Biotechnology and Pharmaceuticals.
Of these, the National Research Program for Genomic Medicine is the most recent, and is a major part of Taiwan's goal to become the Asian center for genomic research.
The National Science and Technology Program for Agricultural Biotechnology is devoted to research in seven major fields: floriculture and ornamental plants, plant protection, aquaculture, livestock vaccines, plant genetic improvement and modification, environmental protection, and medicinal plants.
The National Science and Technology Program for Biotechnology and Pharmaceuticals focuses on the development of new drugs, herbal medicine, and on biochip technologies and analysis methodologies.
Division of R&D roles
Along with the above mentioned government bodies are vigorous R&D programs being undertaken at the island's many outstanding universities and graduate institutes. Together with such academic institutes and private industry, the government has established a clear division of roles for those undertaking R&D within the life sciences. Each institute involved, whether upstream undertaking basic research through midstream to downstream at the product-commercialization level, has a well-defined and coordinated research mission.
For example, the Development Center for Biotechnology (DCB) is a non-profit research institute and service-provider, undertaking research at the pre-clinical stage. The DCB has a clear and well-defined mission, serving as a bridge between the academic and industrial communities. The center not only sources promising biotechnologies overseas through its BioFronts program, but also has its own research labs in Taiwan for the refining of such technologies.
The center has GLP-standard experimental animal lab facilities, fully accredited by the Association for Assessment and Accreditation of Laboratory Animal Care International (AAALAC), the only such accredited facility in Taiwan. It also has a cGMP pilot plant for antibodies and proteins, with 300-liter and 500-liter bioreactors on-site. The DCB bundles these facilities and services to help local companies set programs and help build alliances between international biotech companies and local firms.
Thanks ,it looks like Putin Russia has a similar model.Hope India also follow this model for high tech industry
About top-down system, I have read in a Business Mag, for many years Lucky Goldstar (LG) was a small trading house engaged in import and export of consumer goods, before identifying sectors and products where they would expand. In the 80s and 90s they imported Toshiba, Sanyo, Philips products and exported (incredibility) to India and other 3rd world countries of South America & South Asia. Stories of Samsung, Daewoo, Hyundai also same. Indian Pvt sector also followed the same route with Nelco, Bush, Murphy but failed.
For all their bottoms-up approach, Taiwanese Industry remained uni-dimensional. Their prowess in semiconductor technology is indisputable. But Taiwan is nil in other sectors unlike Japan & S.Korea. So it is difficult to pinpoint the factors responsible for failure & success in Manufacturing Enterprise.
They have decent IT industry and growing from Medicine industry and cycle making industry
@Martian can tell you more about it?
IT hardware is all about electronic chips, it boils down to semiconductor. Chip Foundries are unavailable unless local expertise is available in Silicone doping.
About medicine, I am sorry even we Indians are far ahead. And what is cycle industry? Is it any hi-tech area?
The most important factor of Taiwanese companies is their profitability. Unlike Japanese multinationals (e.g. Toshiba, Hitachi, and Mitsubishi), large Taiwanese companies do not cook their accounting books, lose lots of money, or falsify data such as mileage for cars.
Taiwan is strong in semiconductors and electronics.
Taiwan does have a growing bio-medical and bio-technology sector.
Taiwan's GIANT owns the patents and is probably the world's largest producer of expensive mountain bikes.
Taiwan is also strong in petrochemicals, such as Taiwan Formosa's multi-billion dollar expansion at its Texas plant.
Taiwan was Asia's largest yacht builder. However, I think China is the largest now because they purchased a large Italian yacht builder.
Taiwan is also strong in LEDs, LCD displays and associated technologies like drivers and other chips, photovoltaics, and other industries. I'll have to look at my old posts to highlight other Taiwanese economic strengths.
In conclusion, I think Taiwan's bottoms-up approach is superior over the long term. It is sustainable. The Japanese keiretsu has already failed. We'll see how long South Korea can last with their chaebols. Taiwanese companies MUST be profitable. There is no government or keiretsu/chaebol to keep an unprofitable Taiwanese company afloat. This means there is no deadwood in the Taiwanese economy. This means Taiwan's economy is the MOST EFFICIENT.
Taiwanese company proposes $9.4 billion chemical project in Louisiana | FuelFix
Medicine and biotech in Taiwan is mainly domestic company or PSU not MNC .Extreme mountain bikes are require a decent mechanical and high precision industry similar to watches .
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