Major memory manufacturers ProMOS Technologies and Rexchip Electronics have been delisted from Taiwan’s stock market. TI-Acer and Vanguard International Semiconductor departed long ago, and the once-thriving Powerchip Technology has also been delisted after its share price shrank to NT$0.3. Share prices for the handful of memory makers that are still listed on the stock market range between NT$1 and NT$4.
The fate of these trouble-stricken companies, which account for around half of Taiwan’s wafer output, makes a laughing stock of President Ma Ying-jeou’s (馬英九) bold statement that he would not be worthy of being president if he could not save Taiwan’s DRAM industry. It also signals the bankruptcy of the “Two Trillion” and “Twin Star” plan that the previous Democratic Progressive Party (DPP) administration claimed as one of its major achievements, and trillions of New Taiwan dollars have gone down the drain in the process.
At a big economic symposium held earlier this year, a former government official appointed by the then-DPP administration said that the economy had got into this miserable state because the government has no comprehensive industrial policy.
Council for Economic Planning and Development Minister Yiin Chii-ming (尹啟銘) retorted that Taiwan does not have a state capitalist system like South Korea. Following Yiin’s comment, another participant from the pan-green camp stressed that Taiwan’s small and medium enterprises (SMEs) are quite strong. The views expressed in this exchange highlight the root cause of the tradgedy.
Asian economies in the post-war period have followed a variety of paths. Hong Kong chose non-interventionist liberal economic policies. The Japanese and South Korean governments took the state capitalist approach, giving support to some of their leading companies, allowing them to grow into massive corporations with domestic monopolies and ultimately to become major players on the global market.
As for Taiwan, it has followed a pattern of half-baked state capitalism and half-baked liberalism.
Although the government has supported Taiwan Semiconductor Manufacturing Co (TSMC) and the petrochemicals industry, there are no monopolistic corporations. Small and medium enterprises and original equipment and original design manufacture assembly factories are also part of the science and technology sector, yet they have had to depend on their own strengths to thrive.
The pan-green academics’ remarks at the symposium revealed their admiration for the South Korean model. Although Yiin responded in scathing terms, he did not say that the South Korean model was a bad one.
If the Chinese Nationalist Party (KMT) and its pan-blue allies thought the South Korean model was wrong, they should not keep promoting former economic minister Li Kwoh-ting (李國鼎) and former premier Sun Yun-suan (孫運璿) as models for achieving economic development, nor should they have said that a president who could not save Taiwan’s DRAM industry would be unworthy of the post.
South Korea’s support for its chaebol conglomerates is not just intended to let them monopolize the home market — the real purpose is to prepare them for ruthless competition in a capitalist market where the strong win and the weak fail. The South Korean government might give companies its all-out support, but if it finds that they are not up to the task, it will withdraw that support with no apologies offered.