Headline July 09, 2015/ "' TAIWAN : AFTER THE PERSONAL COMPUTER "'

"' TAIWAN : 

AFTER THE PERSONAL COMPUTER "'

THE FIRST iPhone went on sale on June 29th, 2007. Tom Sun recalls the date easily, because TPK, of which he is the chief executive-

Began manufacturing exactly four weeks before, making  touchscreens for Apple's gadget. A  year later, Mr Sun determined that  1.2 billion mobile phones were made with touch screens.

The iPad has since  "created a segment"  , the tablet, that he says is "100% touch".    

Taiwan, once a maker of soft toys and umbrellas, has long been a high-tech hive. It provides a rare example of successful industrial policy  [though much more so in hardware than in software] .

In 1973 the state created the  Industrial Technology Research Institute  {ITRI) to nurture the tech industry. ITRI started with semiconductors, securing the transfer of old technology from RCA, an American company, in 1976. In 1983 ITRI developed a clone of the  IBM PC.

Seven years later it formed an alliance of  notebook-PC companies. Information and communications technology now makes up for more than one-third of  GDP.

The island came to dominate the notebook business. The Market Intelligence and Consulting Institute  [MIC] , a research group in Taipei, says that its companies make 89% of the world's notebooks, as well as 46% of the desktop PCs.

These days they make them mainly with Chinese labour ; 94% of their hardware,  by value, is produced on the mainland. But the demand for PCs has plunged. Shipments fell by 13.9% in the year 2013, in the first quarter, according to IDC, a research firm. People would now rather buy smartphone or tablets.

For some Taiwanese companies, the change in computing fashion has been a boon. One is TPK. Another is Taiwan Semiconductor Manufacturing Company, a chip  ''foundary"  spun out of ITRI in 1987, TSMC makes chips by the bucketload for designers such as:

Qualcomm, an American company which provides the brains of more smartphones than anyone else, and MediaTek, its neighbour in Hsinchu, which sold 120 million smartphone chipsets in 2012 and sold over 200 million in 2013.

The change is a sterner test for firms that built their success on the PC. Taiwan has two PC-makers, ACER and ASUSTEK,  in the world's top five brands, but the industry is much bigger than these two.

It mostly comprises anonymous  "original design manufacturers"  {ODMS} making machines for Hewlett-Packard, Dell, Lenovo and others, as well as for Acer and ASUSTEK.

Quanta is the leading notebook maker; behind it are Compal, Wistron, [originally part of Acer], Pegatron {once part of ASUSTEK} and Inventec.

Hon Hai, also known as Foxconn, is the best known abroad, but chiefly as a maker of iPads and iPhones. It manufactures much else; its revenue is almost four times Quanta's.

ODMS's margins are low: 3.5% gross and 1.2% at the operating level. That is fine when the volumes are high, but some firms have suffered declining revenues, Inventec's fell by 20% between 2009 and 2012. Worse, the margins have been thinning.

Attempts to breathe new life into the PC have so far been disappointing. Granted, at Computex Intel, maker of the chips that power most PCs, showed off a new, energy efficient processor, while Acer and ASUSTEK paraded ingenious touchscreen designs, the glory days of the PC are over.  

However, the mobile market is fiercely competitive, and not only among the ODMS. At the high-end the Taiwanese must contend with South Korea's giant Samsung. At the bottom a multitude of Chinese manufacturers are turning out cheap, unbranded Android tablets of fast-rising quality.

Another option is to make servers, to store and process data from all those mobile devices. Quanta has begun doing this several years ago. 85% of its servers are sold directly to the final customer. Its clients include Facebook, which has gigantic data centres to fill.

Servers are helping Inventec  to make a recovery. Its revenues are up and growing. And its clients include HP  -which, reckon Kirk Yang and his colleagues at Barclays, a bank, also takes 60% of its notebooks.

Wistron has been branching out too. Since some years, the company is evaluating ways of turning the ODM into a broader "technology service provider."

Wistron spread into cloud computing, after sales-service,  medical equipment

and recycling.  It is also now operating a facility in Texas for recovering precious metals from computers and smartphones.

In Kunshan, in China, it can recycle 60,000 tonnes of plastic  a year. Together the new areas account for 10% of revenues.

"Taiwanese can adapt in a very short time," says Chris Hung, an analyst at MIC. They have done so  before, such as when they moved production to China to take advantage of its big, cheap labour force.

Up against Chinese capital as well as labour, not to mention the South Koreans, they must do so again." 

With respectful dedication to all the Students, Professors and Teachers of Technology. See Ya all on !WOW!   -the World Students Society Computers-Internet-Wireless:

"' The Joy Of Knowing "'

'''Good Night and God Bless

SAM Daily Times - the Voice of the Voiceless