Should the IC Industry Provide Services?

According to the China Post (CP) Professor Joseph Shyu of National Chiao Tung University (NCTU) said that Taiwan's IC manufacturers should look to providing services in the future and reduce their focus on manufacturing.

Taiwan's integrated circuit (IC) industry should switch from major manufacturing to providing IC knowledge and management services, a scholar proposed at an international forum yesterday in Taipei.

Speaking to 22 visiting engineering majors from Ecole Poly technique of Montreal, Canada, Professor Joseph Shyu of National Chiao Tung University (NCTU) said that it is not wise for Taiwanese companies to focus only on manufacturing.

Taiwan is such a small island with a limited population -- we have no reason to believe that we can compete against economies like the United States or China," he said. "We have to be flexible and dynamic."

The fact is Taiwan's pure-play foundries (TSMC and UMC) have already competed against their US counterparts successfully. In fact, TSMC and UMC created a whole new type of business and in many ways were responsible for nurturing and developing the fabless design industry. Prior to the pure-play foundries chipset companies had to invest heavily in their own manufacturing facilities. Enabling companies to outsource chipset manufacturing provided an ideal environment for smaller fabless companies to exist, one of the most famous being Nvidia.

These companies have also spun-off their own fabless chipset design companies. For example UMC have spun-off ITE Tech, Novatek and Mediatek to name a few. Taiwan's IC manufacturing companies are strong and will continue to remain strong over the short term at least. Of course market conditions change and the competitve environement will change too so these companies will have to adapt in the future. However, competing against TSMC or UMC will be very difficult for any startup, even in China.

Professor Shyu is correct when he says "We (Taiwan) have more international experience and primary management systems (than China)."

Article: IC industry should provide services: scholar