K. T. Li: The Godfather

I completely missed this. Taiwan Journal had a piece on K. T. Li, a person many regard as the godfather of Taiwan's hi tech industry. He was there at the beginning and helped to import many technologies to Taiwan. He was instrumental in getting the neccessary funding for TSMC and for helping to start the company. Without him the technology landscape here would be very different.

Please follow the link to read the article: Nation commemorates 'godfather of technology', its worth taking the time. And if this arouses your interest, you can try to find a copy of K.T Li and the Taiwan Experience, an excellent biography of K. T. Li (although the English is a little rough). If you are in Taiwan, I know the Taiwan University library has a copy that you may borrow.

TAITRA on Taiwan and Branding

Ok, so maybe its a little bit of "blowing our own horn" propoganda, but hey, somebody has to do it right? In a press release TAITRA speaks about their efforts to brand Taiwan products:

Taiwan’s information and communications technology (ICT) companies play a key role in the global supply chain for electronics products. Taiwanese companies account for about three-quarters of the world’s production of PCs and half of the world’s liquid-crystal displays (LCDs). In addition, Taiwan makes about a quarter of the world’s semiconductors and about a fifth of the world’s mobile phones.

Taiwan has a population of 23 million and a land area of only 36,260 square kilometers, less than half of a percent of the 9.6 million square kilometers of land in China. Yet the well-educated, industrious people of Taiwan have helped to carve out a huge niche in the global ICT industry.

The press release continues:

To promote the Taiwan’s industry, the government has made the development of branding the key task for raising the competitiveness of Taiwan’s economy. There are two ultimate goals of the Branding Taiwan programme. The first is integrating resources to assist the establishment of brands and create a favourable environment for development. The second is to aid Taiwan enterprises in brand development and increase the value of Taiwan’s international brands.

Actually, it may be a little bit of self promotion but what TAITRA is doing is great. Previously on this blog we have bemoaned the lack of ability in branding in Taiwan and TAITRA have seen the weakness and have stepped in to help. If they can acquire and pass on the relevant expertise and transmit effective and meaningful branding capabilities to more and more tech companies, the sky will be their limit.

You may scoff and scorn at this suggestion but this is a very typical Taiwanese method: importing expertise and knowledge. It should be recalled that one of the fathers of the tech industry here (K.T. Li) developed an advisory council that comprised soley of foreigners including the then head of Texas Instruments. The sole purpose was to understand how to import/transfer technologies to Taiwan.

If TAITRA can successfully import and transfer the neccessary branding skills and knowledge to companies here, Taiwan will become an even more potent force in the global technology landscape.

All I can say is go Taiwan (now that sounds a bit biased doesn't it?)

Hon Hai and Foxconn Invest

Hon Hai and Foxconn have been busy with some foreign investment strategies. The first is what seems to be a US$60 million cooperative venture in Turkey with HP. According to CNN Money:

Taiwan's Hon Hai Precision Industry Co. (2317.TW) plans to invest up to US$60 million to build a personal computer manufacturing facility in Turkey together with Hewlett-Packard Co. (HPQ).

"H-P is our strategic partner and there is evidence of growth in the market for PCs" in Turkey, said Hon Hai spokesman Edmund Ding on Wednesday.

An article in Vietnam Investment Review suggests Foxconn will build a handset factory in North Vietnam. The article says.

With initial investment of $200 million, Foxconn’s new factory, which will be able to produce nearly 90 million units per year, will become the second foreign-invested facility in Vietnam to produce mobile phone handsets, after Korea’s Samsung.

The new facility will be built on the 485 hectare Binh Xuyen 2 Industrial Park, the developer of which is Fuchuan, a Foxconn subsidiary. Binh Xuyen 2 is designed to accommodate Foxconn and its suppliers to locate manufacturing facilities in Vinh Phuc province, about 50 kilometres north-west of Hanoi.

More Foxconn news is that according to Trading Markets, Foxconn intends to employ an addition 10,000 people in their Wuhan, China plant.

Taiwan-based electronics maker Foxconn Technology Group (Foxconn) is likely to recruit as many as 10,000 employees for its Wuhan plant this year in accordance with its production expansion plan, disclosed a person in the know recently.

In the current economic climate pounding the electronics sector and driving down sales, with rumored massive layoffs at Foxconn's Shenzhen plant and with Foxconn apparently laying off people in other parts of the world, it makes for interesting and surprising reading. It should be said though that Foxconn's strategic view of Vietnam has been a long term vision and they were intending to invest their for sometime, as apparently have many other Taiwanese companies.

The investment in Turkey is another interesting choice. My sister lives their and the PC enviornment in Turkey seems fairly primitive and unsophisticated and their probably is huge demand. Of course this will also help them gain more direct access into Middle Eastern and Mediterranean markets and in the long term penetrate central Asia although their 2008 investment in Russia may be able to penetrate those markets better.

CNN Money: Hon Hai Precision, H-P To Build US$60 Million PC Manufacturing Plant In Turkey
Vietnam Investment Review: Foxconn making good on its ambitious promises
Trading Markets: Foxconn Said to Recruit 10,000 Employees for Wuhan Plant

25% of 2008 Intel Revenue from Taiwan

Digitimes reports Taiwan was responsible for 26% of Intel 2008 revenue.

While Intel's sales were flat in 2008, Taiwan was one of the few geographic regions where sales increased. According to the chipmaker's recently released annual report, revenues from Taiwan increased about 15% in 2008 to US$9.9 billion, while the company's overall sales of US$37.6 billion were down a slight 2%. Leading the way in terms of sales growth in 2008 for all geographic regions was the Americas (outside of the US), where sales were up 16.5%. Japan was the only other sales region that saw growth in 2008, at a slight 1.5%.

Taiwan accounted for more than 26% of Intel's sales in 2008, up from 22% in 2007.

Amazing! Honestly, still shows there is some traction in Taiwan's tech sector when everyone is busy writing them off.

Digitimes: Taiwan accounts for more than 25% of Intel revenues in 2008

Fabtech Editorial on Taiwan DRAM Industry

Fabtech has an excellent editorial on the consolidation of the DRAM industry in Taiwan. Citing lack of any IP as a competitive weakness, and outlining how the government here intends to consoldiate the industry while strengthening the IP, the editorial ends saying "some way down the road more consolidation will be required to bulk up against Samsung. IMHO, either Micron or Elpida should get all the Taiwan DRAM companies, that way creating a low-cost, IP protected powerhouse that would keep Samsung in check."

Febtech: Taiwan’s DRAM manufacturers split in the middle

Morris Chang Predicts Three Year Recovery

Interview in the Wall Street Journal, Morris Chang anticipates the semiconductor industry will take three years to recover to 2008 sales levels. The pounding the semiconductor industry has taken over the past few months due to the financial crisis has forced semiconductor sales to drop dramatically. According to the WSJ:

The global semiconductor industry has yet to hit bottom and likely won't recover fully from the current downturn for another three years, according to one of the industry's senior figures, Taiwan Semiconductor Manufacturing Co. Chairman Morris Chang.

In an interview Friday, Mr. Chang said the industry, which has been hard hit by the global economic slowdown, was "pretty close" to the bottom. But he said that a return to the sales volumes that the industry had before the current slump would be extremely slow. "You get a precipitous drop and a very slow rise," he said.

"I think it will be 2012 before the total revenue of the semiconductor industry gets back to the '08 level," said Mr. Chang, who founded Taiwan Semiconductor in 1987.

The WSJ continues:

Mr. Chang also said he expects industry consolidation to pick up. He predicted a continued decline for companies that make both consumer products and semiconductors. Of the companies that still do both, he said that only Samsung Electronics Co. and Intel Corp. are in a strong position. He said others would likely divest themselves of their semiconductor operations, leaving production to companies like TSMC, which manufactures semiconductors on a contract basis for other companies.

Mr. Chang has worked in this industry for a long time and his thoughts do carry some weight. It will be interesting to see how this all pans out over time, especially the consolidation of the foundry industry. What will be more interesting will be to see how the new foundry company being spun off will survive. The foundry business is a tough business to play and one can only imagine the perils of entering the industry at this point in the economic cycle.

Wall Street Journal: Executive Sees Chip Industry Recovery in Three Years

Taiwan IC Design Houses See Small Recovery

Digitimes reports that same design houses like MediaTek, ITE Tech and RealTek are seeing a recovery in orders. According to Digitime, MediaTek is expecting 10-15% growth in February and both ITE and RealTek have seen increased orders from companies like ASUS and MSI.

According to Digitimes: "Customers in China have begun to rebuild inventory levels, helping sales of Taiwan IC design companies to grow this month, according to industry sources." Digitimes also says analog design houses and LCD driver chip design houses are also expected to see some growth in February.

To see some sectors making small, incremental gains is encouraging. Is this growth sustainable over the course of the next few months? Who knows? Its been a wild ride down over the past few months and why will the short term future be any different?

Digitimes: Taiwan IC designers see recovering sales