Skinny computers fatten Taiwan's high-tech firms

They were told it was impossible. So a bold group of Taiwan's semiconductor chip engineers set out to do it: In half a year, they mastered the technology to mass produce liquid- crystal displays for notebook computers and monitors that had taken Japanese engineers painstaking years to perfect.

"We did it in six months because of our two strengths - semiconductors and assembly," says Eric Yu, a spokesman for Acer. As Taiwan's biggest computer manufacturer, Acer is also the biggest player in the island's nascent liquid crystal display (LCD) industry, the technology that allows computer screens to be slimmed down to notebook size.

Taiwan's electronics sector has grown from humble beginnings in the 1970s to become the present supplier of half the world's computer hardware. And seven months after a devastating magnitude 7.6 earthquake that killed more than 2,000 people and caused billions of dollars in damage, the island's economy bears few scars from the tragedy.

In contrast to the heavy government intervention and support for large business groups that produced Korea's electronics boom, Taiwan's success came mainly from small- or medium-size producers and raw-materials suppliers. Banded together in loose networks and aided by government tax breaks, they greenhoused the high-tech industry.

The successful growth of the homegrown LCD industry may make the island a one-stop center for notebook-computer production, strengthening the island's claim to be the world's computer forge.

This year, Taiwan's production of the thin film transistor liquid crystal display panels (TFT LCDs) used in notebook computers will shoot up eightfold to $2.6 billion worth, from almost zero two years ago.

Makers of larger LCD panels are competing in the big screen television market with plasma display screens, the sleek-looking TVs that have already proved popular for business videoconferencing but carry a prohibitive price for most couch potato viewers. Plasma screens use gas instead of liquid crystals and are brighter, but require more power and are more costly to produce.

Mainly because of the high cost of the technology and materials, plasma screens are years from being competitive in the smaller-monitor market. Yet the increase in global LCD production could hasten the demise of the cathode-ray-tube TV monitor by lowering the price of flat- screen TVs and may even lead to lower notebook-computer prices.

Despite the September earthquake, foreign firms are outsourcing more and more computer production to Taiwan, banking on its ability to absorb new technology at breathtaking speed and churn out low-priced high-tech products.

The elliptical rise of the island's LCD industry was only possible because veteran chip designers from Acer Displays, Unipac Optoelectronics Corp., Quanta Display Inc., and others burned the midnight oil. In recent years, Taiwan's computer firms have been developing higher-margin services, like design, in-house. Alongside Japanese mentors, the designers pored over blueprints and were troubleshooting on the factory floor, overcoming language difficulties that often led both parties to resort to gesticulating and scribbling diagrams on paper. The Taiwanese swiftly grasped the automation process, the key to profitability, and even improved on Japanese processes, according to Acer's Mr. Yu.

Leading Japanese LCD makers have formed alliances with five Taiwanese companies to build TFT LCD "fabs" - from the German word fabrik, (factory) - in Taiwan over the past year. Unipac Optoelectronics began last December producing LCD panels with technology from Japan's Matsushita Corp. Company spokesman Shigei Nagayasu says, "Taiwan's strength is in electronics. Everyone wants to invest in it, and the most talented people go into electronics.

"Most of the LCD engineers won't go to the US, because LCD technology's very backward there," Mr. Nagayasu adds. But "they won't go to Japan except for training, because it's not like the US, where you can get by without good English."

(c) Copyright 2000. The Christian Science Publishing Society

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