From 1980 to 2000, with almost no competition, Taiwan enjoyed significant growth and earnings from IC foundry manufacturing. However, the easy money and lack of long-term vision and planning have trapped the nascent industry in a state of perpetual infancy with dismal innovation and choking dependency on foreign intellectual properties that suck away more than 90 percent of Taiwanese manufacturers’ profits.
For the past 15 years, Taiwan could no longer dominate the “copy and produce” market. Many Southeast Asian nations can all perform exactly the same tasks at lower labor costs.
A rising China makes the economic challenge Taiwan has been facing even worse.
Yes, China, a master of controlled economy with no regard for international business rules, is employing many unfair tactics in the brutal field of electronics commerce. Taiwan can keep bemoaning it, but crying foul alone will not pull Taiwan out of the vortex.
Instead, Taiwan must honestly re-evaluate itself and seriously conduct an inventory of what it has now, what it is capable of and what it wants to attain in the future. Self-re-examination and self-critique are never pleasant, but it is a must to prevent the nation from continuing its downhill slide.
What does Taiwan have at this moment in the highly competitive electronics business — consumer products in particular? Sad to say, Taiwan’s electronics industry is still basically a fabrication house dependent on others’ innovations.
What has caused this gloomy state can be traced to an overly inflated higher education system in which colleges and universities are staffed with faculties who have excessively glorified doctorate degrees, but scanty industrial experience.
Then, what is Taiwan’s actual capability at the present? A hypothetical question may provide an answer.
Prior to the end of World War II in 1945, Japan was able to mass produce the famed Zero fighters. If Japan now offers a set of Zero fighter design drawings free of charge, will Taiwan’s current industrial organizations be able to produce the fighter on the same scale?
Judging from Taiwan’s inability to manufacture automobiles on its own, the country stands no chance to successfully roll out the fighter in large quantities.
The above conclusion may sound cruel and self-defeating, but it is drawn on, and substantiated by, numerous facts. Here are some of them.
Chip production facilities, like Taiwan Semiconductor Manufacturing Corp, employ many expensive electro-optical, photolithographic equipment — none of which is designed and made by local firms.
Semiconductor product testing also requires precision oscilloscopes. Again, Taiwan does not possess the skills to make those critical instruments.
In short, Taiwan lacks the core strength to support a viable electronics industry in the long term.
If Taiwan intends to remain a competitive player, it must consider the following actions.
The society as a whole, including government agencies, civil organizations, academic institutes and industrial sectors, should rethink the practice of idolizing advanced degrees.
The functions of major higher education institutes must be re-oriented so that they no longer operate like career mills for faculty members.
All education organizations, from kindergarten and up, should move to an English-based system because the Chinese language is hindering education effectiveness and retarding technology advancement.
Businesses engaged in semiconductor chip production must be encouraged to move away from unsophisticated digital memory and, instead, commit resources to enter analog circuits, smart sensors and power/energy system management.
Situated at 23o north latitude, Taiwan enjoys plenty of sunlight. Tropical monsoons also bring sufficient rainfall, therefore water. God has endowed the nation with two precious elements of life in addition to its fertile soil. Over the years, the country has forged an unmatched success in high value, natural food production. On that base, there are reasons to believe that the country is ready to move to high-density, soilless, indoor, hydroponic aquiculture utilizing LED-based artificial sunlight and computer-controlled, networked dripping tube irrigation.
Imagine rows and rows of greenhouse-like buildings built with translucent vinyl sheets and simple steel structures capable of sustaining high winds. Inside each building are tomatoes, green beans, cucumbers and other plants, each with roots covered by sponge patches and fastened to thousands of vertical bamboo or metal poles.
Miles of thin irrigation tubes equipped with controlled nozzles pointing at plant roots are routed from a water and nutrient control center. In addition, steerable LED lamps on rail tracks move along and supplement photosynthesis lighting during night hours.
Such an operation of high-quality food production will not only boost farming income, but also buttress demands on application-oriented electronic inventions, including sophisticated biological monitoring, computer-controlled techniques, power/energy management, and unique hardware parts. Those are areas Taiwan’s current prowess can improve and profit from.
In summary, what Taiwan lacks in essential capability for high-end electronics business can be pretty much made up by its superior knowledge for high-value food production.
Let it be understood, in a famine, a basket of delicious Taiwanese mangoes would command much more value than a truckload of iPhones. Instead of beating its head against a silicon ingot, Taiwan can stand on countless 21st-century greenhouses and grain silos, and smile.
Kengchi Goah is a senior research fellow at the Taiwan Public Policy Council in the US.
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