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Future directions for Taiwan’s technology companies: a round-table13/12/2006. Source: IVC Research Center.
 In April 2006, the IVC Research Center hosted a roundtable discussion with leading Taiwanese businessmen to discuss challenges to Taiwan’s technology companies, hot areas for the future, and potential technology collaborations in Israel.
Participants in the discussion were Professor Chintay Shih, Dean of Tsingua University, and board member of Taiwan Semiconductor; Tai-Ming Parng, CTO of ASUSTek Computer, Inc., a leading global provider of PC motherboards; Benjamin Jen, head of Corporate Strategy and Investment for Quanta, the world’s largest notebook PC manufacturer; and Dr. James Ho, Deputy Executive Secretary of the Taiwan Development Fund, a government investment corporation. Yishai Klein of Giza Venture Capital hosted the discussion.
IVCJ: Over the past five years we have witnessed Korean companies like Samsung and LG becoming household names. Do you think there is a chance that Taiwanese companies, like Benq, through their acquisition of Siemens Mobile, will also succeed?
Jen: Korean companies like Samsung and LG did not happen overnight. They spent large amounts of money, acquired a variety of companies, and had losses before they came to their position in the market. Benq is on the right track, from my perspective. You must keep in mind that the organizational structure of Taiwan is different from that of Korea. We have more small to medium corporations in contrast to Korean companies, which are more like conglomerates after the Japanese business model. For example, in the Taiwanese LCD industry, we have seven or eight companies competing with the two main Korean companies in the market.
Though we are in an equal position right now, there is a different strategy. Samsung is going to invest more than $100 million, equal to the combined investments of the Taiwanese companies. The success of Korean companies largely reflects the resources they can put in – the money they invest every year. Taiwan’s advantage is that small and medium companies are more flexible and can quickly change in response to the market.
IVCJ: Shouldn’t an effort be made to assist Taiwanese industry?
Prof. Shih: Naturally, the government needs to provide incentives to help industry develop and enable more companies to emerge with a global brand identity.
IVCJ: Over the next five years, what are the major challenges faced by Taiwanese companies?
Prof. Shih: Over the last 20-30 years we have developed a strong base in IT, but the current challenge, of course, is how to move forward. Other countries such as China and Korea are able to provide lower manufacturing costs, so our challenge is to become more innovative. On the other hand, Taiwan’s proximity to China gives our companies access to competitive low costs. We see complementary strengths with Israel. We’ve been extremely pleased to meet so many innovative Israeli entrepreneurs, and we believe that there is an opportunity to forge collaborations between Taiwan and Israel to help meet the competitive challenges.
IVCJ: There is a common belief that those looking to do business in China should look and learn from what the Taiwanese have done. What are some of the main models for Taiwanese companies working in China?
Jen: In the beginning, most companies went to China for an alternative manufacturing base. But now, almost all manufacturing has moved there. However, I don’t think companies have been successful in selling to China, at least in an IT capacity, as their market is very competitive. Working with Taiwanese companies, however, the potential isn’t limited to manufacturing. We share the same language and culture, so from a market perspective we have an advantage as a bridge for companies in other countries that want to do business with China.
Prof. Shih: I agree. Taiwanese companies have been making investments in China since the early 1990s, and these investments, along with Taiwanese management, are partially responsible for China’s rapid growth in the last 10 years. Western and Japanese businesses are also eager to get into China, but due to the language barrier and different culture, it will take considerably more time to accumulate the experience Taiwan already has. For companies looking to make inroads into China, working with Taiwanese companies makes good sense.
IVCJ: In which new tech sectors, or subsectors, would you envision Taiwan becoming one of the world leaders in the next 10-15 years?
Jen: I think that in terms of products related to information technology, we have a competitive edge. Logistics is also one of the country’s strengths, with our products being delivered very efficiently to worldwide destinations. But beyond our current capabilities, we, like many countries, are struggling to find new areas of focus. I see potential in silicon-based solar technology as a strength for Taiwan. While a ‘lower’ technology than semiconductors, it is also less capital intensive, which gives Taiwan’s small and medium companies an edge.
Dr. Ho: Another sector is telematics – electronic systems for vehicles – especially as there are more and more electronic parts being integrated into automobiles by the automotive industry. Medical devices is also a sector where Taiwan is active and considerable development is taking place.
Parng: Though the applications aren’t entirely clear yet, many companies are working in the digital home area.
IVCJ: Could you name companies that you have visited while in Israel that have interested you in terms of potential collaboration with Taiwan?
Prof. Shih: I think that 3DV Systems is very impressive. Though they might be a little ahead of the market, the technology is great for applications in the gaming field.
Parng: A company that particularly impressed me is Horizon Semiconductors. Some of the Japanese are pushing to develop technology in a similar direction, but they are slow in finding applications. Horizon seemed confident and energetic about achieving their goals.
Jen: I would like to answer the question differently. Most of the companies that I have seen in Israel have been innovative, as well as able to offer a practical product. Israeli companies are innovative in a way that is different from their US counterparts. Whereas US companies develop new technologies and can’t envision their proper applications, Israeli companies know how their technology will be used. They see the end-goal and envision their technology in a specific device. 3DV has found a path for their technology to go to the market.
Dr. Ho: Further to that, I think the best way to describe Israeli companies is through the phrase, "If you can dream it, we can make it."
This article appeared in the Israel Venture Capital & Private Equity Journal (IVCJ). IVC Research Center publishes the Israel Venture Capital & Private Equity Journal, a quarterly review of trends and developments in the Israeli-related venture capital industry. IVCJ, distributed worldwide, is dedicated to provide wide-range coverage of Israel's venture capital industry. For more information please visit www.ivc-online.com
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