Emerging Industries

As introduced by the Yearbook of the Republic of China:

As a part of Challenge 2008, the Ministry of Economic Affairs (MOEA) is promoting a "Two Trillion and Twin Star" program, a four-year project to drive the production value of Taiwan's semiconductor and flat-panel display (TFT-LCD in particular) industries to NT$1 trillion (US$29.6 billion) each, and build the digital content and biotechnology sectors into star industries, all by 2006. The National Si-Soft Project was also launched to upgrade Taiwan's integrated circuits (IC) industry.

Semiconductors

After more than two decades of development, Taiwan's semiconductor industry has distinguished itself by its complete industry supply chain, significant clustering effect, and strong capabilities in OEM wafer manufacturing. By 2002, the production value of Taiwan's contract chip-making industry accounted for 73 percent of the world's total output, and its IC packaging industry accounted for 32 percent of global output. Taiwan is also the world's second largest supplier of IC designs, next only to Silicon Valley, accounting for 28 percent of the world's output. Leading players of the sector include the Taiwan Semiconductor Manufacturing Company Ltd (TSMC) and United Microelectronics Corporation (UMC).

As the only country in the world that possesses a professional division-of-labor system in the semiconductor industry, Taiwan also has the highest efficiency in wafer fabrication and the highest density of fabs for 8-inch wafer production. By 2002, there were four 12-inch wafer plants, twenty-two 8-inch wafer plants, eight 6-inch wafer plants, five 5-inch wafer plants, and one 4-inch wafer plant in Taiwan.

According to the MOEA's "Two Trillion and Twin Star" program, by the year 2006, Taiwan is forecasted to become the world's third largest semiconductor supplier, with production value reaching NT$1.59 trillion (US$47.1 billion) and three of its companies among the world's top 10 chipmakers. It is also expected that by 2006, Taiwan will have the highest density of 12-inch wafer foundries and offer the highest efficiency in wafer fabrication in the world. The emphasis of the program will be placed on developing Taiwan's own technologies for advanced system-on-chip (SoC) processes, a higher local content rate, and enhanced coordination between the industry's upper-, middle-, and downstream businesses.

Flat-panel Displays

Taiwan's flat-panel display industry developed out of the TN/STN LCD industry and expanded to the production and processing of TFT-LCD (Thin Film Transistor-Liquid Crystal Display) and upstream components, such as glass substrates, color filters, polarizers, backlight modules, and driver IC. Investments in other display techniques, such as plasma display panel (PDP) and organic light-emitting diode (OLED) technology, have also increased rapidly.

With large demand from local notebook PC manufacturers and technical advantages borrowed from the semiconductor industry, Taiwan's TFT-LCD industry has achieved its current strong position in less than five years of development. In 2002, Taiwan's output of large TFT-LCD panels reached US$5.77 billion, ranking second in the world and accounting for 34.7 percent of the world's total output. Presently, there are 110 companies in Taiwan's flat-panel display industry creating a value of US$8.95 billion, of which exports account for 47 percent and domestic sales 53 percent.

With the commencement of the "Two Trillion and Twin Star" program, measures are being taken to offer more incentives to businesses, resolve patent-related problems, and strengthen R&D and training of new talents. These actions will not only help free Taiwan's flat-panel display industry from technological dependence and its current shortage of skilled staff, but also give it a more completely integrated structure. Through the cooperation of government and industry, the flat-panel display industry is expected to achieve a value of NT$1.37 trillion (US$40.53 billion) by 2006, making Taiwan the largest TFT-LCD supplier in the world.

Biotechnology & Pharmaceuticals

Taiwan holds several key advantages for developing its biotechnology and pharmaceutical industries, including its human resources, R&D capabilities, venture capital, and flexible manufacturing skills. After many years of effort to improve agricultural production and studies of Asia-specific diseases and Chinese herbal medicines, Taiwan has been able to accumulate ample experience in certain niches of biotechnology and pharmaceutical research.

Presently, the sector's upstream segment of academic research has reached international standards, while the midstream segment of development capability has also achieved a high level. As for the downstream segment, in addition to the existing 425 pharmaceutical companies and 380 medical equipment companies, over 100 pure biotech firms have been formed over the past three years, mostly focusing on R&D for biopharmaceutical products, health foods, herbal medicines, diagnostics, biochips, and agriculture. In 2002, Taiwan's biotechnology and pharmaceutical industries registered a total production value of US$3.215 billion.

Foreseeing the potential of the industry, the government has offered numerous incentives and grants to encourage investment and research. With strong government and public support, the industry is expected to achieve 25 percent annual growth and NT$150 billion (US$4.44 billion) in accumulated investment by 2006, leading to the establishment of over 500 biotech firms within a decade. Taiwan hopes to become a vital link in the international biotechnology community for R&D and commercialization, as well as become a center of R&D, manufacturing, and operations for biotech businesses in the Asia-Pacific region.

Digital Content

Digital content is a diverse and wide-reaching sector that includes console and PC games, computer animation, e-learning, network services, content processing software, digital audio and video, mobile application services, e-publishing, and digital archiving. Taiwan has many advantages for developing this industry, such as a solid foundation for its information and communications industries, a thriving publishing industry, a high penetration of cable TV and broadband networks, and world-class production capabilities in its movie and advertising industries.

According to the statistics of the Industrial Technology Intelligence Services (ITIS) of the MOEA, by 2002 there were around 1,700 Taiwan companies in the digital content business, producing such products as content for mobile devices, computer games, 2D/3D-animations, software, and streaming video. With an output of US$4.55 billion in 2002, Taiwan's digital content industry grew by 18 percent compared with a year earlier. Taiwan's digital content businesses have formed two basic industry clusters in Taipei, one in the Neihu and Nangang districts, the other in the area spanning Sindian, Jhonghe and Yonghe. In accordance with the "Two Trillion and Twin Star" program, the government will build real and virtual industrial parks to promote the industry, establish digital content colleges to introduce the newest technology, and direct human resources from the liberal arts field into this sector to develop new talents. The production value of this industry is expected to reach NT$370 billion (US$10.95 billion) by 2006, with the number of businesses reaching 3,000 and the export ratio increasing from its current 12 percent output to more than 30 percent.

National Si-Soft Project

Launched in 2003, the National Si-Soft Project is designed to upgrade Taiwan's IC industry from mainly contract manufacturing to R&D and innovation oriented, turning Taiwan into a world leader in the profitable IC design industry. The project intends to make Taiwan the one-stop for IC design, mix-and-match intellectual properties, manufacturing, and testing.

The Si-Soft Project involves developing at least five key products whose combined output would total NT$500 billion (US$14.47 billion) over the next 15 years, and developing the System-on-Chip (SoC) infrastructure in Taiwan. Specific contents include automation software, silicon intellectual property (IP), embedded software, and system single chip, which are all necessary for IC design. The project is expected to encourage an investment of NT$4 billion in the R&D of SoCs and to create more than 200 IPs.

Through the set-up of an IP Mall, the circulation and re-use of IPs can be expedited, reducing the cost of IC design companies for repeated development. The IP Mall will quickly enhance IC design techniques and competitiveness, making the foundry business more attractive to worldwide customers, and help IP designers gather market information to expand global market channels. By February 2004, there were two IP Malls in Taiwan, the first of their kind worldwide, and there were about 900 IPs for use in the two IP Malls. It is estimated that the Si-Soft Project will increase the total production value of silicon-related industries in Taiwan to NT$10 trillion (US$286 billion) in 10 years.