Taiwan’s high-tech companies lacking in innovation and value creation are struggling to stay profitable in the face of growing competition from China and the US, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) chairman Morris Chang (張忠謀) said yesterday.
Chang, recognized as Taiwan’s top manager globally and the most significant contributor in the semiconductor industry, said all of the nation’s technology sectors, except integrated circuit (IC) makers and designers, face an uncertain or bleak outlook due to inadequate innovation and value creation.
Tech firms that manufacture DRAM, computer, display, solar, LED and mobile devices are under pressure to remain viable while the industry outlook for IC foundries such as TSMC and IC design houses are healthy, Chang said.
“Innovations and value creation are the key to success while capital intensity is a burden,” Chang told the Asia-Pacific Council of American Chambers of Commerce, which is meeting in Taipei.
Companies should put greater emphasis on innovation and value creation and focus less on capital, in line with the development of a knowledge-based economy as opposed to a capital-based economy, he said.
Producers of computers, PC’s and notebooks need to reinvent themselves to reverse the industry’s decline, despite it being the earliest technology industry in Taiwan, Chang said.
The sector is non-intensive in terms of research and development, innovation and capital because the “Wintel” ecosystem — centered around US software giant Microsoft Corp and chipmaker Intel Corp — limits innovation opportunities, Chang said.
“It is very difficult for a company to reinvent itself and it usually takes a range of talent to achieve innovation,” Chang said.
As for companies specialized in mobile products, Chang said that HTC Corp (宏達電) is the only innovative and healthy company with intensive research and development and innovation.
The local smartphone vendor is facing strong competition from Apple Inc in the US, Samsung Electronics Co in South Korea and fast-rising brands in China, Chang said, adding that there remains a vast untapped market for low-priced smartphones and Chinese firms are seeking aggressively to fill it.
“The [mobile] industry’s outlook is tough, but hopeful,” he said.
The government can help encourage innovation and value creation by reshaping the nation’s industrial and educational policies, Chang said.
Industrial policy should focus on creating a physical and cultural infrastructure that is conducive to innovation, openness and fair competition, but avoid moves to pick winners or rescue losers, Chang said.
Educational policy should concentrate on fostering innovation and value creation and grooming leaders of society, Chang said.
Of the 160 universities and colleges in Taiwan, a few should be devoted to training the future leaders of society while 20 others should focus on training innovators and value creators, he said.