Tag Archives: Apple

Taiwan’s TXC serves as “pulse” of smartphones

Posted on June 19, 2013 | Leave a comment

In April, Taiwan’s TXC overtook Japan’s KDS as the third largest quartz crystal component maker in the world, only behind Seiko Epson and NDK. The five top suppliers of quartz crystal components are all Japanese except TXC, Commonwealth monthly reported. TXC’s customers include all the top brands, such as Apple (US), Samsung (South Korea), HTC (Taiwan) and Huawei (China). Strongly competitive, each of the five global players in the seven billion smartphone market uses quartz crystal components from TXC.

Quartz crystals are key components in frequency generation and control devices for signal timing in smartphones. In simpler term, if one were to consider the chip to be a smartphone’s heart, then the quartz crystal component would be the delivery system, which supplies blood to every part of the body.

For a long time, the Japanese dominated with 80 percent of the global market, but by dedicating more resources to R&D and being increasingly competitive, TXC made its way into third place. In 2012, TXC’s combined revenues reached a record high level of NT$10.93 billion (US$364.33 million) with a 10.4 percent growth rate, and continuing its eight years of double digit profits.

In a field where engineers and PhDs litter high-tech companies, Lin Wan-xin, TXC’s president is a rarity. With only a high school education, he built his professional knowledge from the bottom up and broke through Japan’s dominance in this high-tech sector, leaving competitors from Taiwan, Korea and China far behind.

Around the year 2000, the global notebook computer market enjoyed exponential growth, noted Commonwealth. This caused delays from Japanese suppliers of quartz crystal components. Big European and American companies, like Intel and Seagate, sought to diversify their supply sources and TXC was lucky to become one of the suppliers of global notebooks.

In 2005, smaller and more advanced telecom products like smartphones started to proliferate. And TXC entered the supply chain of brand names like Motorola and Nokia. About that time, Apple also started to make iPods. TXC got a chance to present its product at Apple’s headquarters, but was rejected because of the low product quality. Lin was not deterred. He sent his R&D engineers to study quality control and successfully resubmitted his product just in time to become part of Apple’s supply chain.

According to Commonwealth, with more and more customers, TXC expanded its R&D team five times (to 300 engineers) in 10 years, accounting for 20 percent of the workforce at its Pinzheng factory in Taoyuan County (northern Taiwan). His team helped TXC to secure 15 projects a year, averaging one per month.

With abundant innovative energy, TXC made better products, climbing out of the top ten to become No. 3 in the rankings. Lin said, “To keep competiveness, you have to provide better products so that your competitors will not catch up.”

Now TXC accounts for 75 percent of the quartz crystal components of Apple’s mobile devices. Hitching with Apple, TXC climbed to the top. But Apple’s growth has slowed after the death of Steve Jobs, so TXC’s revenues are also down 1 percent compared with last year.

In order to safeguard its future, Lin said, TXC has diversified its customer base. Beside Apple, TXC has added more new companies to its customer list, including Huawei and Zhongxing Telecommunication Equipment Corp., HTC, and Samsung.

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From Taichung to Silicon Valley, Taiwan keeps pace with global markets

Posted on May 10, 2013 | Leave a comment

With over 300 companies, Taichung County in central Taiwan is the largest cluster of machine tool companies on the island. It is also the center of the components supply chain shared by Taiwan’s three major industrial alliances of bicycles, sports equipment and machine tools. Without this clustering of firms, it would be impossible for these important industries to experience their recent stellar growth.

Despite the global financial tsunami (2009-2012), Taiwan saw several of its products maintain export growth of 100 percent. They included special glass, digital cameras, mechanical arms for the machine tool industry, and components for processing machines. Other areas also grew over 50 percent in value, such as garments, knitting and the steel screw industries. According to Taiwan’s Business Weekly, the manufacture of sports equipment, auto parts, hand tool machines and plastic products also experienced over 20 percent growth.

Clustering speeds up development and delivery

The top three global socket set handle brands from Germany, Italy and Japan, use Re-Dai Precision Tools Co. in Taichung as an OEM. These socket handles are essential for repairing and maintaining BMWs, Mercedes-Benz and F1 racing cars.

Business Weekly reported that in Taiping, Taichung, there is a street lined with all the makers of computer numeric control (CNC) machine tools, and another street where all the electroplating companies operate. These clusters of 30 to 50 small businesses are capable of producing any part for bikes, machine tools or treadmills.

Habor Precise Industries Company, in Dali, Taichung, is the largest manufacturer of high-end temperature control equipment in the world. Seven of the top ten machine tool manufacturers in Japan are customers of Habor. Even the top products of the advanced PCB drilling and routing machine maker Posalux of Switzerland, the leading wafer foundry producer, Taiwan Semiconductor Manufacturing Company, and special makers in the supply chain of Apple’s products, are all made by Habor.

Orange Electronic Co. in the countryside of Tanzih, Taichung, is the only maker of wireless tire pressure monitoring systems to successfully enter the American automobile service market. Orange has beaten large competitors such as Lite-On Technology, Delta Electronics, and Mobiletron Electronics to win over Standard Motor Products (SMP) Inc, a leading distributor and maker of replacement parts for motor vehicles in the US. As a publicly traded company, Standard is so confident with Orange’s potential success they have decided to invest 25 percent in the Taiwanese company, according to Business Weekly.

To Silicon Valley, Taiwan still matters

On April 4, Facebook entered the smartphone market in a joint venture with Taiwan’s HTC to develop software for Facebook Home. In the future, the home page of their smartphones will display active news from FB, in direct competition with the core business of Google, while Google also works with Hon Hai/Foxconn to manufacture the Google glass, a wearable computer with head mounted display.

Taiwan has been a valuable partner for the US high-tech industry. Even though Apple, Google, Facebook and Amazon are squaring off with each other, they all benefit from the contributions of Taiwanese high-tech companies, Commonwealth monthly said in its cover story entitled “Taiwan still matters”. A report on the future of the technology industry in Asia, compiled by the Samsung Economic Research Institute, termed the US-Taiwan partnership as “Taiwan is a king maker for US IT companies.”

Every day there are 480 million visits to Facebook, which takes tens of thousands of servers to support. All these servers are made by Quanta Computer in Taiwan. In 2012, the global server market grew about one percent, but Quanta registered 19 percent growth due to the substantial growth of Facebook and Rackspace, a cloud and management service hosting company based in Texas. One of every seven servers in the world is made and sold by Quanta. It is estimated that sales of servers made by Quanta will overtake those sold by IBM in 2013, Commonwealth reported.

Other Taiwanese companies are also closely tied to top IT companies in the US. Hewlett-Packard is the largest foreign buyer in Taiwan, with a purchase of NT$750 billion (US$25 billion) in 2012. With the supply chain of Taiwanese companies, HP is capable of shipping two computers and two printers every second, the monthly noted.

In June 2012, Google introduced a tablet Nexus 7 in a joint branding exercise with ASUS. Sales soared immediately after launch, even surpassing iPad sales in Japan. And according to Commonwealth, Apple could not expand its empire without the Hon Hai/Foxconn Technology Group. In 2006, when Apple introduced the iPod, Hon Hai’s revenues exceeded over NT$1 trillion (US$33.33 billion) for the first time. With the subsequent introduction of the iPad and iPhone, Hon Hai’s revenues reached NT$3.5 trillion (US$117 billion) in five years, equivalent to the total revenue of the top ten manufacturers in Taiwan.

Recently, Foxconn decided to reduce its reliance on Apple by not focusing on only being solely an outside contractors, but towards developing their own products, with an especially hard push toward designing and producing large, flat screen televisions.

What’s next?

At a time of speeding growth of mobile telecommunications, the original design manufacturer (ODM) which Taiwan was proud of is no longer valuable. ODM is disappearing fast.

Lee Kun-yao, BenQ chairman, understands clearly that Google has done almost everything from the top to the bottom including hardware design, interface between users and smartphones, ergonomic engineering of the products, and even the business model after manufacturing in house. Google’s model leaves little room for Taiwan’s ODM.

In the 2013 Global Competitiveness Report (GCR) published by the World Economic Forum, Taiwan was ranked first in terms of competiveness of industrial clustering development among 144 worldwide economies. Yet despite the clustering resources, Taiwan still lags behind Germany and Japan. Business Weekly attributes the cause to a lack of innovation, as the reason Taiwan came in at 14th place in the GCR.

In the GCR’s overall rankings, Taiwan is placed No. 13, a little higher than South Korea, but far behind Switzerland, Singapore, Finland, Sweden, the Netherlands, Germany and Japan. This means merely clustering development is not sufficient. Taiwan must continue innovating to remain competitive.

At the end of 2012, Dr. Victor Tsan at the Institute for Information Industry in Taipei, warned the Economics Ministry that, if Taiwan’s ODM and OEM industries do not transform or upgrade, they will be left with the manufacturing service only, lower added value and lower unit price. This is what Dr. Tsan is worried by when contemplating the electronics and technology industries of Taiwan, according to Commonwealth.

However, Dr. Wang Ting-an, director of the Science Division of the Taipei Economic and Cultural Office in San Francisco, is confident and optimistic. He told Taiwan Insights, if Silicon Valley is the new rocket of global technology innovation, Taiwan will be working as the rocket propellant. For Apple, Google, Facebook and Amazon, Taiwanese companies have always been a necessary partner in realizing technology innovation.

Dr. Wang believes, in the face of Silicon Valley’s technology innovation, Taiwanese industry must get rid of the mentality of making only marginal profit and start industrial transformation, so as to create added value, for buyers, for consumers, and even to contribute to environmental protection. Only when the performance of Taiwan’s products and services exceeds the expectation of its customers can Taiwanese companies enjoy the benefits of high gross profits and brand recognition. “This is the only way to survive for Taiwanese industries,” stressed Wang.

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Taiwan brands seeking to break the OEM pattern

Posted on December 18, 2012 | Leave a comment

Interbrand, the world’s largest brand consultancy, recently selected Taiwan’s top 20 international brands for 2012. Reflecting on the announcement, Jerchin Lee, executive director of the Taiwan Trade Center in San Francisco said that although establishing an international brand is harder than being an Original Equipment Manufacturer (OEM), this is the only way for Taiwanese companies or even the island’s economy to survive in the future.

The Taiwan Trade Center is an overseas post of the External Trade Development Council (TAITRA), Taiwan’s semi-official trade promotion agency. Designed to promote global product marketing of Taiwanese enterprises and products in Silicon Valley, Lee has an overarching view of each country’s hi-tech businesses and suggests that “Taiwan’s economy should take another direction after traveling on the road of OEM for 50 years. It is imperatively urgent that Taiwanese companies establish international brands,” said Lee.

Is OEM the default position for Taiwan firms?

It has been nearly half a century since Taiwan stopped accepting US aid, embarking on its own road of economic development. Since then, Taiwan has continued as an OEM economy without interruption. Initially, Taiwan’s cheap labor force produced consumer goods in huge quantities, becoming a major exporter of textiles to appliances, footwear to umbrellas. This was Taiwan’s route to rapid industrialization.

Then Taiwanese businesses moved their factories and facilities to mainland China and South East Asia, shifting their roles to bringing financial resources and technology to areas with a cheaper labor force. Orders were still taken in Taiwan, but the products were manufactured by OEMs to customers in Europe and the United States.

The United Daily News pointed out that the OEM model seems to be the fate of Taiwan. On the surface, the most popular products like the iPhone 5 and iPad Mini are mainly manufactured by the high-tech companies in Taiwan. Though Apple makes 50 percent of the gross profit, those Taiwanese companies responsible for producing these famous products only take 1 or 2 percent of the profits.

The Commercial Times reported that Taiwanese commodity exports in 2001 accounted for 2 percent of the total global exports, ranking 14th in the world, but in 2011, Taiwan’s exports accounted for 1.7 percent of total global exports, tumbling to 18th place, demonstrating Taiwan’s industrial lag in terms of international competitiveness.

Enhancing Taiwan’s export competitiveness

South Korea is known internationally for brands like Samsung Electronics, Hyundai Motor, LG Electronics and others, which enhance market competitiveness with their brands. South Korean businesses have also invested in industrial research and development and in diversifying their products to include electronic components, iron and steel, shipbuilding, petrochemicals, plastic products and textiles, and in the process gain competitiveness in international markets.

The Commercial Times stressed that the decline of industrial status in international supply chains is the main reason for Taiwan’s drop in export competitiveness and a lack of economic momentum. The economic and trade agencies of the government should actively develop countermeasures to help Taiwanese products cut into the supply chains of international companies, and to create unique and key technology within Taiwanese enterprises specifically designed to compete in the global market place. Taiwanese companies should also devote more resources to research and development to create a brand presence in a range of fields to increase the diversification and competitiveness of Taiwanese export industries.

Taiwanese brands with Silicon Valley branches

Since 2003, Taiwan’s Ministry of Economic Affairs and the TAITRA have commissioned Interbrand to conduct the Taiwan Global Brands Value Survey to select 20 of the most valuable manufacturers in Taiwan. One of the selection criteria for this survey is that one-third of a company’s revenue must come from markets outside Taiwan.

On the tenth anniversary of the survey, the system continues to use the professional valuation procedures and services of Interbrand, which combine quantitative analysis of corporate financial performance and qualitative analysis of a brand’s role. The survey offers a brand value assessment for Taiwan’s world-class brands and gauges their global competitiveness. The survey is aimed at publicly traded, over-the-counter, international Taiwan brands. The brand valuation system uses the same methodology as used to assess the “100 Most Valuable Global Brand Value Ranking”.

“The information and communications technology (ICT) industry has been Taiwan’s mainstream industry with global competitiveness. Companies in the ICT industry used to take more than half of the top 20 positions, according to Lee’s analysis. This year is no exception, with 11 ICT firms in the top 20. In recent years, Taiwan’s food production industry has expanded rapidly in the mainland China market, and occupies five top 20 places this year. Also among the top 20 are three companies from the sports and leisure equipment industry, and one car tire manufacturer.

The top three spots are taken by the ICT industry. Taiwan’s technology industry has been facing the impact of industrial ecosystem migration from PCs to mobile applications. HTC, ACER and ASUS have retained their top 3 positions in this year’s survey, but the brand values of HTC and ACER have declined slightly after their growth spurt last year. HTC’s brand value was US$1.371 billion, US$3.605 billion and US$2.753 billion respectively in the three years from 2010 to 2012; while ACER’s brand value in those three years was US$1.401 billion, US$1.940 billion and US$1.676 billion respectively.

Among the top three, only ASUS has continued to strengthen in the marketplace due to its continuous innovation, the launch of several “Eee Pad Transformers” in rapid succession, and its collaboration with Google on tablet products such as Nexus7. The brand value was US$1.285 billion, US$1.637 billion and US$1.662 billion respectively, with 2 percent growth this year.

Lee stressed that with regard to the characteristics of each industrial market, the US is the world’s largest market for ICT products, compared to Europe and Asia. Accordingly, the key to success of these top ICT companies is to maintain facilities or posts in the American market, especially in Silicon Valley. More than 80 percent of the top 20 Taiwan brand enterprises, especially those in the ICT industry, maintain a branch office or some posts in Silicon Valley.

Taiwan’s food industry benefits from China market

Among the top 50 large enterprises in Asia over the last four years is Tingyi Holding Corporation, which specializes in making instant noodles and beverages under brands like Master Kong, ranked fifth this year. Their products account for more than 50 percent market share in mainland China. Ranked eighth is Synnex, now the largest ICT products distributor in Asia, also among the top three ICT product dealers of the world.

Ranked ninth among the top 20 Taiwan brand names is Maxxis, also the 10th largest tire manufacturer in the world. Ranked tenth is 85°C Bakery Café, which has over 100 retail stores in China, and continues to expand. Ranked 16th is Johnson Health, the third largest sports equipment supplier in the world with 10 percent global market share. Ranked 18th is Transcend which is the third largest USB flash drive producer in the world. Bikes of Giant and Merida are already well-known leading brands.

Lee mentioned two reasons for the rapid and smooth development of Taiwanese food producers in China – the huge Chinese market and Taiwan’s sterling food safety reputation. According to Lee, Taiwan’s food industry has been actively developing the Chinese mainland market for many years, making improvements in product distribution and operational efficiency, and dedicating resources to manage the unique Chinese life style, driving the growth of the overall brand value of the food industry.

Learning from Apple

Over the past decade, the brand value of the top 10 brands has grown from US$3.564 billion in 2003 to US$10.84 billion this year, a growth rate of 204 percent; triple the total value in 2003. As to the three major goals scheduled to be completed by the end of 2012 in the “Branding Taiwan Plan”, namely that “the brand values of the top five will have surpassed US$1 billion”, that “2 brands will  have surpassed US$1.5 billion” (in fact, 3 brands surpassed US$1.5 billion), and that “the total brand value for the top 20 will have surpassed US$10 billion” (in reality, the total value for the top 10 exceeded US$10 billion). All the goals were fulfilled last year, and this year have been either maintained or surpassed.

OEM and ODM (Original Design Manufacturer) have been the major patterns of development for Taiwan’s international trade. Most companies have focused on manufacturing and production, and have long ignored the importance of research and development and marketing. Even those firms who want to develop their brands have placed more of an emphasis on function, underestimating the value of culture, creativity and marketing that brand names can engender. Lee said, “Let’s look at Apple’s new product announcement. They cover everything on every aspect of the product. This kind of thinking should be ingrained in Taiwanese manufacturers who really want to establish their brands.”

Lee concluded, “I also find that Taiwanese enterprises are in a process of transition, slowly learning how to strengthen brand value. Actually Taiwanese firms have a strong learning ability, and the R&D talent is full of potential. I believe that Taiwanese enterprises eventually will take an important seat in the international community if they are given a little more time.”

More information about the 2012 Taiwan Top 20 international brands can be found at http://brandingtaiwan.org/TopTwenty/en/Index.html.

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Taiwan seeks to keep edge in hi-tech production

Posted on November 19, 2012 | Leave a comment

Whereas in the past, Taiwanese firms played a significant role in the production of the iPhone, this was not the case with the iPhone 5 when it was released in September, according to a recent study by iSupply. Taiwanese companies made a contribution of just 10 percent to the whole supply chain of the iPhone 5, accounting for profits of less than one percent.

Despite this worrying situation for Taiwan’s original equipment manufacturers (OEMs), Taiwan’s Ministry of Economic Affairs announced that the share of Taiwan-made and OEM smartphones reached 37 percent worldwide, placing the island as the world’s leading manufacturer of smartphones. It is expected that Taiwan will continue to hold this top ranking into 2013, solidifying its position as the worldwide epicenter for makers of smartphones and other hand held devices. Taiwan’s domestic production is estimated to reach US$43 billion in 2015, bringing in new investment of US$678 million in 2015, and creating 150,000 job opportunities by 2020, reported the Commercial Times.

In the new age of tablet computing, Global Views monthly said, Taiwan is losing its edge in terms of component sourcing. This affects gross profit and reduces the influence of Taiwan’s electronics industry. Taiwan used to control this area, but now the ball is in Apple’s court.

In the past, Taiwan’s notebook ODMs like Quanta Computer, Compal Electronics Inc., and Wistron, enjoyed the ability to influence components ahead of global brand names such as HP and Dell. They could increase the importance of Taiwan’s component supply chain. But now Apple controls 70 percent of global tablet computing market, exerting more bargaining power and the ability to suggest components. Taiwanese companies are increasingly being relegated to mere assemblers of Apple products, rather than designers and innovators.

Of all the Taiwanese firms, only Foxconn maintained its previous share, accounting for 4.5 percent of the total component assembly for the iPhone 5, while other makers of touch screens and shells did not get any orders from Apple.

A senior product manager in Taiwan pointed out that Apple’s CEO Tim Cook, who took over the reins of the company following the death of Steve Jobs, is an expert on hardware specifications and a tough squeezer of supply chain production costs. As such, the iPhone 5 mainly focuses on upgrading and improving, the hardware, such as adopting the 4G LTE chip set module made by Qualcom and Retina screens made by Sharp. For those component providers, if they were lucky to get orders from Apple, it was at a reduced price, according to Global Views.

In fact, it is getting harder and harder to get orders from Apple. Starting from 2012, many Taiwanese electronics manufacturers, including some ODMs of Apple products, have turned to China for orders. According to Topology Research institute, the global total cell phone production volume, including traditional cell phones, is expected to grow 4.5 percent in 2013, in which the total volume for the Asia Pacific region including China is expected to grow up to 51 percent, far more than the 10 percent expected in North America.

Global Views reported that Foxconn, one of Apple’s main manufacturers, has long been taking orders from China’s brand name cell phones. For example, the company started assembling the “Happy phone” series of smartphones in 2011 for Lenovo, which started by making PCs and is now positioned to take some market share from HP. Foxconn also started this year to take orders of the popular MI-One, a smart mobile phone designed by Xiaomi Tech Company.

Besides Foxconn, TPK Holding (a manufacturer of touch panels) and Catcher Technology (a manufacturer of cell phone shells), and MediaTek Inc. (a fabless semiconductor design house) are all turning to China. These Taiwanese companies have formed new market links between Taiwan and China.

However, when Taiwanese companies apply their smart phone manufacturing technology to China’s brand name products, the advantage of Taiwan’s smart phone technology over China’s counterparts has also narrowed. The challenge now for Taiwanese companies is how to maintain the lead, Global Views stressed.

Now the only irreplaceable value of Taiwanese companies is the optical lens made by Largan Precision Co., in addition to the system assembly.

According to analysis by Business Weekly, the electronics industry was one of the key locomotive forces driving Taiwan’s economic growth, but now most of those related job opportunities have moved overseas leading Taiwan to shift its focus increasingly toward the service sector. More and more manufacturing resources are drawn to the service industry, namely, the so called high technization of services. Once the service industry is integrated with high technology, more innovation will develop.

At present, no one can predict exactly where the next big economic growth momentum will come from, but opportunities are certain to open up. One suggestion is for the government to continue to lift restrictions and let new businesses emerge. In either case, Taiwan still has the most treasured resource – manpower.

According to the global competitiveness report 2012-2013 released by the World Economic Forum in September, Taiwan remains in 13th position due to its sufficient manpower in R&D, its industrial clustering effects, and the low cost of its financial services. According to Business Weekly, Taiwan’s high quality manpower provides unlimited potential for the future.

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Taiwan’s Golden Valley props up global smart phone industry

Posted on June 16, 2011 | Leave a comment

In central Taiwan, there is an area where over a thousand precision machine companies and tens of thousands of downstream suppliers reside. Called the Golden Valley, it covers approximately 37.5 by 0.87 miles (roughly 60 kilometers), and supplies many of the world’s hi-tech businesses, reported the Taiwan-based Business Weekly. It has the world’s highest density of precision machine companies, employing 300,000 people with an annual production value of NT$900 billion (US$30 billion).

Dependence on the Golden Valley

Without the businesses found in the Golden Valley, the global consumption of one billion iPhones this year would be cut in half and the solar plant owned by Google in the desert would be offline. Without this dynamic region, the semiconductor and display panel industries would face a broken supply chain since the top four equipment suppliers of semiconductors and flat panel displays depend on companies in this area for their components

Plus, German and Italian auto-parts companies rely on the mechanical equipment produced here. In the automotive industry, General Motors (US), Porsche (Germany) and Hyundai Motor Company (South Korea), all buy their gear wheels from the Golden Valley. Even China, the largest auto market in the world, is dependent on this area to provide tooling and processing equipment. 

Small companies with long arms

As an example, Quick Jet Machine Co. Ltd, supplies half the stainless steel frames for the iPhone 4. With only 130 employees, the company enables the newest iPhone to be 24 percent thinner than the previous version, producing the thinnest smart phone in the world.

Another company is HIWIN Technologies Corp., which is the main producer of ball screws, a key component for all precision machines. It was the first company in the valley to reach an annual revenue of NT$10 billion (US$33 million). Ball screws are necessary in the semiconductor equipment of the Taiwan Semiconductor Manufacturing Company, used in Apple’s iPhones, Siemens’ MRI scanners, and Google’s solar equipment.  

Now, due to high demand, businesses are rushing to buy Litz Hitech Corporation’s CNC control machine called “Tapping Center.” The only available suppliers, except for Japan’s Fanuc Ltd., are all based in Taiwan. They have outstanding orders of over 10,000 sets of these machines, with Apple accounting for 60 percent of the orders.

These precision machine makers in central Taiwan are shipping over a thousand sets of machines every month to machine shops in China so that over 30 tiny holes can be drilled in iPhones and iPads to install all the parts and components. However, the demand is outpacing supply, accounting for the wait in some places for Apple’s gadgets.

Concentrated business, diversified risks

Bert M. H. Huang, president of Victor Taichung Machinery Works Ltd., told the Business Weekly that precision machine makers in Taiwan have to look towards global markets to survive because the domestic market is too small. There are over 1,000 small and medium-sized companies congregated in the area, each with its own specialty and niche market. They have developed their special ability by quickly adopting different standards and specifications.

As soon as a promising new technology is available, they can get up to speed on the special customized orders for their customers to get the new product to market on time. The companies in the Golden Valley diversify and cooperate with each other to form a supply chain which avoids the unexpected risks of over production.

According to the Business Weekly, Taiwan’s Golden Valley is unique. In Japan and Germany, the set up is quite different, and one giant company takes all 10,000 orders and assumes 100 percent of the investment in equipment. They do everything from upstream to downstream. So they accumulate higher costs, are less flexible, and take all the risks. In Taiwan, the competitiveness of the Golden Valley means that they enjoy the advantage of businesses congregation and spread the risk.  

Taiwan’s precision machine makers have moved upwards to take over the middle class markets of Japan and Germany. Equipped with the skills that match those of Japan and Germany, they are diversified and cooperate among themselves. Meanwhile they are also able to shorten a third of their lead time, and are more flexible in multiplying their supply capability.

In 2010, the total output value of the Golden Valley surpassed that of South Korea to become No. 4 in the world. This year, Taiwan is expected to surpass Italy after grabbing over half of the smart phone processing orders from Apple’s iPhones. This would bring them to third place, behind Japan and Germany. In the Business Weekly, Taiwan’s Industrial Technology Research Institute predicted that the valley will retain its high growth rate, breaking the NT$1 trillion (US$33.3 billion) export value by 2015.

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