No Longer "Made in Taiwan"

Innovation over simple contract manufacturing is the key to Taiwan's economic future, or demise

"Made in Taiwan," the label ingrained in every American, is quickly becoming an icon of the 90's rather than the everyday slogan it once was.

Contract manufacturing now sits in Taiwan’s rear view mirror as the country enters its first age away from just manufacturing. Taiwan’s industry was primarily based on manufacturing but since the late 1990's Taiwanese companies have taken the turn to cell phone development and PC designs, adding innovation to their list of operations.

Four Taiwanese manufacturers control over 70% of notebook manufacturing currently. The other Taiwanese notebook brands control another 10% of the manufacturing development. As early as 2001 the capacity in Taiwan to build notebooks all but vanished. The "Big 4" in notebook assembly builds exclusively in China.

One of the largest outsourcers to Taiwan is Dell, the world’s second largest PC maker. Over 50 percent of Dell's product development is done in its Taiwan branch according to CNET. That branch began with 50 employees in the early 2002 and currently has over 300.

Taiwan's Industrial Technology Research Institute announced that Taiwan had overtaken Japan in mobile phone PCB production earlier this year. Taiwan Semiconductor Manufacturing Company, better known as TSMC, has a 50% global market share for semiconductor foundries alone. Taiwanese manufacturers have nearly a 100% global market share for retail motherboards, power supplies, PC cooling and enclosures. However, there is a trend with all of these big Taiwan claims: virtually all of the production is done inside China.

Taiwanese companies were barred from manufacturing technology outside of Taiwan on less than 0.25 micron nodes until yesterday. The Taiwanese Ministry of Economic Affairsjust declared the 180nm node legall for Taiwanese-owned, Chinese-based manufacturing.

Even with all of these strong indicators that Taiwan has controlling interests in the world of PC manufacturing; investment analysts are already weary of Taiwanese companies in 2007. The TAIEX, or Taiwan Capitalization Weighted Stock Index, has lagged behind other Asian markets for five consecutive years -- about the same time the country began moving its manufacturing base from Taiwan to China.

(c) www.dailytech.com