The Chinese-language Business Today magazine recently published a report about a plan supposedly drawn up by South Korea’s Samsung Electronics Co to “kill Taiwan.” According to the report, having knocked out Taiwan’s DRAM chip and display panel industries in 2008, Samsung now wants to destroy its mobile communications and original equipment manufacturer/original design manufacturer semiconductor wafer makers.
The question is, what powers does Samsung have that would allow it to deliver such a lethal blow? Could it be Samsung’s brand of vertical integration, or its “fear management” or crisis management? The key factor is actually exchange rates.
It would be naive to think that North Korea’s recent provocative words and actions, such as its missile and nuclear weapons tests, and its threat to launch a nuclear first strike, were simply irrational and boorish antics on the part of its leader, Kim Jong-un. We should recognize that the biggest winner has been Samsung.
During the month or so between Feb. 20 and March 25, South Korea’s won dropped 3 percent against the US dollar on the back of the North Korean threat, while the New Taiwan dollar fell by just 0.88 percent over the same period. This has put Taiwan’s high-tech manufacturers at a further 2.12 percent disadvantage compared with Samsung.
If Taiwan Semiconductor Manufacturing Co’s (TSMC) US$17.2 billion annual revenue for last year is multiplied by 2.12 percent, it is set to lose out to Samsung by as much as US$365 million over a year.
Compared with TSMC, Samsung could spend all that extra money on research, development and talent poaching. Assuming that South Koreans and Taiwanese are equally capable and intelligent, this monetary advantage would be the only difference between them, but in a mortal combat between the two giants, it could put Samsung in an unbeatable position. Even if exchange rate fluctuations are compared for the whole of the past year, the South Korean won has fallen by 4.35 percent, compared with 2.58 percent for the NT dollar — still a difference of 1.77 percent.
In Japan, the rise of Samsung prompted many people to delve into “Samsungology,” with most analysis focused on the company’s marketing, vertical integration, fear management and crisis management, but observers overlooked the key factor of the super-appreciation of the Japanese yen. This erroneous understanding and diagnosis caused Japan to miss the opportunity for prescribing the right remedy, and led to the demise, or near-demise, of Japanese technology firms Elpida Memory and Sharp Corp, and has been a factor behind Japan’s 23 lost years.
Only now has Japanese Prime Minister Shinzo Abe’s Cabinet seen the light and instituted its “Abenomics” policy, one of whose main features is a guided depreciation of the yen. This policy has given big Japanese firms like Toyota and Sony a shot in the arm, and boosted their share prices. Evidently, exchange rates are the key factor.
The high exchange value of the NT dollar, compared with the South Korean won and the Chinese yuan, has been a blow for Taiwan’s technology industry. Taiwan’s four major display panel manufacturers alone lost out to South Korea by NT$175 billion in the first three quarters of 2011 because of the exchange rate factor, and this was the main reason for heavy losses incurred by the nation’s panel makers.
This “exchange rate surplus” has enabled Samsung to invest generously in research and development, and marketing. Apart from bringing Taiwan to its knees, Samsung also has the governments of North and South Korea in the palms of its hands.
Huang Tien-lin is former president and chairman of the First Commercial Bank.
Translated by Julian Clegg
A gap appears to be emerging between Washington’s foreign policy elites and the broader American public on how the United States should respond to China’s rise. From my vantage working at a think tank in Washington, DC, and through regular travel around the United States, I increasingly experience two distinct discussions. This divergence — between America’s elite hawkishness and public caution — may become one of the least appreciated and most consequential external factors influencing Taiwan’s security environment in the years ahead. Within the American policy community, the dominant view of China has grown unmistakably tough. Many members of Congress, as
After declaring Iran’s military “gone,” US President Donald Trump appealed to the UK, France, Japan and South Korea — as well as China, Iran’s strategic partner — to send minesweepers and naval forces to reopen the Strait of Hormuz. When allies balked, the request turned into a warning: NATO would face “a very bad” future if it refused. The prevailing wisdom is that Trump faces a credibility problem: having spent years insulting allies, he finds they would not rally when he needs them. That is true, but superficial, as though a structural collapse could be caused by wounded feelings. Something
Former Taipei mayor and Taiwan People’s Party (TPP) founding chairman Ko Wen-je (柯文哲) was sentenced to 17 years in prison on Thursday, making headlines across major media. However, another case linked to the TPP — the indictment of Chinese immigrant Xu Chunying (徐春鶯) for alleged violations of the Anti-Infiltration Act (反滲透法) on Tuesday — has also stirred up heated discussions. Born in Shanghai, Xu became a resident of Taiwan through marriage in 1993. Currently the director of the Taiwan New Immigrant Development Association, she was elected to serve as legislator-at-large for the TPP in 2023, but was later charged with involvement
Out of 64 participating universities in this year’s Stars Program — through which schools directly recommend their top students to universities for admission — only 19 filled their admissions quotas. There were 922 vacancies, down more than 200 from last year; top universities had 37 unfilled places, 40 fewer than last year. The original purpose of the Stars Program was to expand admissions to a wider range of students. However, certain departments at elite universities that failed to meet their admissions quotas are not improving. Vacancies at top universities are linked to students’ program preferences on their applications, but inappropriate admission
RSS