and Service Organization). The government also helped to set up industrial parks in an effort to build industrial clusters where they did not previously exist.

He then introduced the first speaker, Genda Hu, vice-president for advanced technology development at the Taiwan Semiconductor Manufacturing Co.

GOVERNMENT-INDUSTRY PARTNERSHIPS IN TAIWAN

Genda J. Hu

Taiwan Semiconductor Manufacturing Company (TSMC)

Dr. Hu, who worked at IBM, Xerox PARC, Cypress Semiconductor, and other U.S. companies before moving back to Taiwan, played a major role in setting up Taiwan’s partnership programs. He said that many people have wondered what the secret was behind Taiwan’s rapid progress in the semiconductor industry. He dismissed the idea of a secret, saying that it was certainly not a miracle and that it had taken Taiwan 25 years of hard work to reach its current position. Nevertheless, he did consider a number of factors to be critical to the successful story in Taiwan. He said he could not cover the financial aspects, which were complex, but would confine his remarks to the story of the technology R&D.

An Overview of the Industry

He began with an overview for those not familiar with Taiwan’s industry. (See Figure 8.) The total revenue generated by the industry in Taiwan in 1999 reached about U.S. $14.3 billion; for the year 2000, revenues were expected to reach about U.S. $22 billion, a 57 percent increase, compared with a world growth rate projected at about 37 percent.

He said that Taiwan divides its industry into four sectors: design, which consists primarily of fabless semiconductor or design houses; fabrication, which includes foundries and also IDMs (integrated device manufacturers), such as Winbond and some DRAM companies with fabs and other products; packaging; and testing. He said the Taiwanese industry is a “vertically dis-integrated” infrastructure where many companies focus on a particular expertise rather than trying to do everything. The definition of revenue is different from the revenue quoted by the WSTS (World Semiconductor Trade Statistics). The WSTS figure for revenue is based on the final integrated circuit as a product. In Taiwan revenue may relate only to a service value, such as packaging, which is considered a value added. Likewise, a foundry produces wafers but not integrated circuits per se. For example, Taiwan has 127 design houses without fabs, 21 companies with fab facilities, 42 packaging companies, and 33 dedicated testing houses. To many people, he said, this is a “really amazing” number of companies. In addition, there are supporting companies, such as those that provide starting substrates, chemicals, leadframe, and substrates for the packaging industry. Most companies



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