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S Korean official cites challenges facing tech firms

The high-tech industries of South Korea and Taiwan face common challenges, a Seoul official told a Taipei seminar yesterday: They lack core technology and are vulnerable if China gains a comparative advantage in manufacturing.

"China offers a huge market for Taiwanese and Korean manufacturing industries," said Lee Kyo-yung, program deliberation and mediation chief in South Korea's Ministry of Information and Communication.

"The IT industries in Taiwan and Korea are moving plants and equipment to China for lower labor costs," Lee said, adding that both countries also are dependent on the US and Japan.

Attending the Taiwan Tech Summit organized by the Business Software Alliance's Taiwan branch, guest speaker Wang Chen-tang (王振堂), president of Acer Inc, expressed different views regarding the problems that Lee raised.

"Though there are Taiwan-owned factories in China, order receiving, customer relations, finance and services are all controlled by Taiwanese companies," Wang said. In addition, companies holding core technology in the US or Japan still need Taiwanese original equipment and design manufacturers (OEMs/ODMs) that play a key role worldwide, he added.

Transformation

Core technologies are in vain if companies cannot successfully move their products to the competitive edge, another guest speaker said.

"We saw quite a few Japanese companies fail to transform their core value into competitiveness because of their high costs," said Frank Huang (黃崇仁), chairman of Powerchip Semiconductor Corp (力晶半導體).

Taiwanese firms could acquire technology through technology transfer and innovate with more efficient practices, and finally become competitive on their own, Huang said.

New digital home appliances and software could help boost Taiwan's industry to a new chapter, industry representatives said.

"Taiwan's flat-panel industry has a great advantage in developing digital TVs," said Lin Kuo Wen-yen (林郭文艷), executive vice president of home appliance company Tatung Inc (大同).

Information appliances

The production of information appliances (IA) in Taiwan amounted to about US$3.9 billion last year and is expected to reach US$6.4 next year, according to figures provided by the Department of Industrial Technology under the Ministry of Economic Affairs.

Taiwan also has developed independent technologies for key components in this regard, Lin Kuo said, giving the example of the nation's integrated circuit supply chains.

Meanwhile, the enhancement of usability and integration of multiple interfaces for IAs could create business opportunities for the local software industry, she added.

Guest speaker James Liu (劉瑞隆), general manager of SYSCOM Computer Engineering Co (凌群電腦), cited International Data Corp's figures that the output value of software and information services is estimated to account for 52 percent of global high-tech production in the future.

"Research and development is crucial to the industry," Liu said. "In the meantime, we must address ourselves to the protection of intellectual property to safeguard the fruits of our efforts."
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