In light of the growing popularity of entertainment gadgets, new application products and services offer a realm for further information technology industry growth in coming years, an industry veteran said at a luncheon organized by the European Chamber of Commerce Taipei yesterday.
"The [development] opportunity has moved from the server-end [that stressed greater computing power and larger storage] to peripheral client-end applications such as cell phones, game consoles and digital TVs," said Johnsee Lee (
New applications associated with lifestyle and human-touch products as well as with the Internet and information communication networks constitute an area of opportunity for such companies to introduce products or services, he said.
Lee said innovation is a key factor in Taiwan's high-tech upgrading, but another guest speaker disagreed.
The IT industry encountered increasingly slim margins, and innovations are not necessarily effective in lifting these thin margins, said Martin Hirt, Asia Pacific high-tech and telecom co-leader at McKinsey Asia.
Consider local contract man-ufacturers, also known as original equipment manufacturers.
Business expansion caused these firms to invade each other's areas of expertise, which led to keen competition and low profits, Hirt said.
Taiwan also has seen a dramatic shift of IT manufacturing to China in the late 1990s, driven by low labor and manufacturing costs. Hirt said that Taiwanese firms accounted for as much as 65 percent of China's IT production last year.
Approved investment in China by Taiwan's electronics and electric equipment industries soared nearly threefold to US$875 million in 1997 compared to the previous year, and reached a high point of US$2.6 billion in 2002, according to figures provided by the Investment Commission under the Ministry of Economic Affairs. The industries' investments in China amounted to US$2.3 billion last year.
Another guest speaker remained bullish about Taiwan's high-tech sector against this backdrop, with especially high hopes for the nation's booming semiconductor industry.
"With a complete supply chain [of integrated circuit design, manufacturing, packaging and testing] ? Taiwan retains core competence for semiconductor manufacturing," said Gordon Chen (陳文咸), president of the Taiwan Semiconductor Industry Association (台灣半導體協會).
The sector generated revenue of US$25 billion last year and is expected to create US$30 billion this year, Chen said.
Taiwan would have a total of nine 12-inch fabs by the end of next year, making it the country with the world's highest density of such operations, Chen said.
As the No.1 player in integrated circuit manufacturing and packaging as well as the No.2 player in integrated circuit design, Taiwan also is well-positioned to develop advanced system-on-chip technology, which allows chip designers to integrate multiple chips for memory and main processors with reduction of circuits to near-atomic proportions, Chen said.
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