In Taiwan, Lamenting a Lost Lead

Taiwan

TAIPEI, Taiwan — Jonney Shih, the chairman of Asustek Computer, has epitomized the Taiwanese electronics engineer for a generation: a slender figure in rumpled, baggy trousers, he once helped Intel solve heat problems in its Pentium 4 microprocessors.

Asus’s product, the PadFone 2, lets the user slide a cellphone into the back, turning a tablet into an oversize cellphone.

So it has been a surprise over the last several years to see Mr. Shih, now 60, reinvent himself with snug-cut Italian suits, innovative designs for tablet and notebook computers and scathing criticisms of Taiwan’s test-obsessed, engineering-oriented educational system.

“I don’t think the Taiwanese got very good training to drive the mentality of innovation,” he said during an interview at Asus’s headquarters here on the outskirts of Taipei. (Mr. Shih also demonstrated his flexibility in the interview, assuming the lotus position while wearing a dark blue Armani suit with a sky-blue Armani tie.)

Fostering innovation has become a mantra among corporate leaders and government officials alike in Taiwan this year because the island’s huge consumer electronics industry has run into serious trouble.

Worldwide sales of PCs, for which Taiwanese companies control over 90 percent of the final design and manufacturing, are declining steadily. Sales of smartphones, for which Taiwanese companies control less than a fifth of the market, are rising briskly. Tablets based on the Android operating system, which most Taiwanese companies, with the exception of Asus, have been slow to embrace, are also on the same upward trajectory.

“Outside of Asus, all the others are struggling,” said Helen Chiang, a Taiwan electronics specialist at the IDC research firm.

Foxconn and Acer have each reported that sales in the first quarter dropped 19 percent from a year ago. HTC’s sales plunged 37 percent, although that was partly because the company began shipping the annually improved version of its best-known smartphone in late March instead of February. At Quanta, a 70,000-employee contract designer and manufacturer of notebook computers, sales have shown double-digit percentage drops from year-earlier levels for 14 consecutive months.

Foreign rivals have proved more nimble. In South Korea, Samsung is expanding rapidly in smartphones, tablet computers and other sectors. After embracing the Android operating system early, the company has built on its huge economies of scale in the mass production of components, like display screens and microprocessors.

In China, Lenovo and many smaller manufacturers are relying on labor that, while no longer cheap, is still less expensive than in Taiwan. That helped make Lenovo the only one among the top five PC makers worldwide to eke out a gain in shipments in the first quarter — although by only a tenth of a percent.

And in the United States, Apple, Google and Amazon have shown themselves adept at producing breakthrough consumer products, while pending legislation would allow them to import more foreign engineers at a lower cost than hiring and training domestic engineers.

As notebooks and other Windows-based PCs have lost ground, first to Apple tablets and now to Android-based designs, even Microsoft has been indicating dissatisfaction with the pace of PC innovation in Taiwan. Despite a longtime aversion to hardware, Microsoft recently introduced its own Surface tablet.

“The Surface tablet is a pretty strong signal to the whole Taiwan PC ecosystem that they’re not innovating enough,” said Bill Whyman, a senior managing director at the ISI research firm.

One exception to Taiwan’s difficulties is Asus. Its many new Android-based tablets, including one that it has branded with Google, allowed it to surpass Amazon in the first quarter of this year to become the third-largest player in the global tablet computer market, behind Apple and Samsung, according to IDC.

And some of its designs are downright clever. One new model, the PadFone, lets the user slide a cellphone into the back, turning the tablet into an oversize cellphone. Another tablet, the Transformer, features a detachable keyboard with a wireless connection and a two-sided display panel that can show a movie on one side to entertain children or guests while the other side is a regular computer display for the owner.

Those innovations have helped keep Asus’s sales growing, up 16 percent in the first quarter from a year ago. That was even as worldwide PC shipments fell 11.2 percent, according to Gartner, another research firm.

Taiwan’s strengths and weaknesses in pursuing broader innovation echo the challenges of many countries that, for varying reasons, seek to foster the growth of industries based on creativity. The United States and Europe have long worried that their businesses and universities come up with many new ideas but then fail to commercialize them. Mainland China has fretted that its businesses and universities are too slow to come up with original ideas.

That Taiwan needs to look to 60-year-olds like Mr. Shih for innovation is a concern for government officials. As economic growth has stalled in Taiwan and new factories have shifted to mainland China, young people have become more interested in civil service jobs and academia instead of industry, government and industry officials say.

One worry is that people with new ideas at universities and government laboratories are not commercializing them. “Our teams think the problem here is those inventors didn’t pursue it, to push their inventions into the market,” said C. Y. Cyrus Chu, the official who oversees the National Science Council. “Youngsters here are afraid to fail — we are not ready to face failure.”

The government has started a program of grants and advice for inventors to help them develop business plans and seek venture capital.

Another big concern for industry and government is that the ability of Taiwan’s electronics business to innovate may be hamstrung by the very quality that has brought the sector so far over the last three decades: obsessive secrecy.

American giants like Apple have long treasured the ability of Taiwanese companies like Foxconn to do the final engineering and then mass-produce new consumer electronics devices by the millions, with remarkably few leaks to competitors or to the ravenous technology news media.

To win contracts to supply the likes of Hewlett-Packard and Dell, Taiwanese companies routinely divide their staffs and dedicate teams to each foreign customer. They even set procedures for making sure that engineers and buyers from different clients do not accidentally meet one another while having lunch at company cafeterias here.

But that secrecy makes it harder for the Taiwanese industry to learn good ideas quickly from foreign and domestic rivals. “They keep secrets and don’t duplicate, so the customers are happy to work with them,” said Chan Wen-Hsin, a senior industrial technology specialist at the ministry of economic affairs.

Taiwanese technology companies have decades of experience in accepting detailed computer performance benchmarks from American customers and then figuring out the least expensive way to meet those benchmarks. But that may also be an obstacle to innovation now.

The least expensive approach often involves barely exceeding the benchmarks, and not coming up with solutions that may cost more but dazzle consumers.

Mr. Chan cited a decision by Steven P. Jobs, then Apple’s chief, to choose glass screens for the iPhone instead of plastic ones, which could be scratched.

In Taiwan, he said, “we do not pursue a perfect solution; we pursue a good enough solution.”

Yet another concern for Taiwan, much more than for the United States, lies in a brain drain of midcareer technology experts who speak fluent Mandarin Chinese. A tripling in the number of mainland Chinese college students over the last decade, to 30 million last year, has produced a severe shortage of professors who speak Mandarin Chinese.

The result has been a series of departures from Taiwan’s universities and elite, government-backed research institutes. Even the vaunted Industrial Technology Research Institute, which gave birth to global semiconductor powerhouses like the Taiwan Semiconductor Manufacturing Company and the United Microelectronics Corporation, has been losing experienced researchers.

To be sure, Taiwanese companies are now trying to increase the pace of innovation. Acer says that it plans to double research and development spending as a share of sales this year, by 1.2 to 1.5 percent. Gregory Bryant, the general manager of Intel’s Asia and Pacific operations, said, “There is a resurgence of innovation and investment in Taiwan.”

One lingering cost advantage for Taiwanese companies is that pay here for recent college graduates in electronics engineering and computer sciences is low and gradually declining. A rapid expansion of higher education over the last decade has produced a flood of fresh job applicants. Recent graduates typically earn $800 to $900 a month — more than in mainland China, where the pay is more like $500 to $600 a month, but still much less than in the United States.

Japanese automakers opened design centers in the United States as pay in their home market began catching up with American levels, like the Toyota center in Ann Arbor, Mich., and the Nissan center in San Diego. But Taiwanese electronics companies have been wary of following suit. Asked why Asus does not open an engineering center in the United States so as to tap American innovation, Jonathan Tseng, the company’s vice chairman and president, gave a single-word answer: “Cost.”

Asus, a 10,000-employee company, does have an office of 300 employees in Fremont, Calif., which includes sales staff and so-called program managers, who are responsible for pricing, marketing and consumer research.

Analysts say that Asus’s innovations may not represent the same kind of big leaps forward as the iPad or iPhone, but may be what other Taiwan manufacturers need to retain their role in the global consumer electronics industry.

“It’s incremental, it’s true,” said Tracy Tsai, a Gartner analyst here. “But compared to other device manufacturers, they are doing better.”
 
 
This article has been revised to reflect the following correction:

Correction: May 14, 2013

A picture caption on Monday with an article about a push for innovation in Taiwan described incorrectly the sitting position of Jonney Shih, chairman of Asustek Computer. While Mr. Shih did assume the yoga lotus pose during an interview, he was shown seated in a cross-legged position in the picture, not in the lotus pose.

A version of this article appeared in print on May 13, 2013, on page B1 of the New York edition with the headline: In Taiwan, Lamenting A Lost Lead.


紐時:台灣欠創新 電子業丟優勢

紐約時報十二日報導,創新是今年台灣企業領袖與台灣政府的共同口頭禪,理由是台灣的龐大消費電子產品產業已開始陷入嚴重困境。紐時指出,創新不足、人才流失導致台灣科技產業優勢漸失。

紐時發自台北的報導指出,台灣科技產業市占率逐漸下滑,台灣廠商掌控全球個人電腦(PC)九成以上的終端設計與製造,但 PC 銷售正不斷下滑。

台灣的筆記型電腦和其他 Windows 系統 PC 於市場節節敗退,先是輸給蘋果的平板電腦,現在則在 Android 系統相關設計上落後,連微軟也對台灣的 PC 創新步調緩慢表達不滿。向來嫌惡硬體的微軟,最近推出 Surface 平板電腦。

ISI 研究公司高級常務董事懷曼說:「Surface 平板電腦對台灣整個 PC 生態系統發出極其強烈的訊息,他們已不夠創新。」

紐時同時引述華碩集團董事長施崇棠的話說:「我認為台灣人在啟動創新心理上,沒有非常好的訓練。」報導中說,除華碩之外,其他廠商都陷入困境。華碩推出的多種新 Android 平板電腦已使它今年第一季超越亞馬遜,成為全球平板電腦市場老三,僅次於蘋果和三星。

紐時說,台灣需要仰賴像施崇棠這種六十歲的企業家來創新,令台灣政府官員感到憂慮。政府與業界官員指出,隨著台灣經濟成展停滯,新工廠遷移到中國大陸,年輕人對加入公職與學術界的興趣提高,對產業界反而不感興趣。

台灣科技產業的另一隱憂在於學校與政府實驗室無法將他們的新點子商品化。行政院國科會主委朱敬一說:「我們的團隊認為,問題出在發明者並不追求商品化的目標,讓他們的發明進入市場。年輕人害怕失敗,他們並未準備好面對失敗。」

另一個問題則是台灣電子業為了服務不同客戶,採取的嚴格保密流程,例如嚴格區隔不同客戶的工作人員與研究團隊,以確保各個客戶間的商業秘密不會在工廠內洩漏。但這種服務,同時讓台灣產業失去了快速學習對手優點的大好機會。

台灣人才嚴重流失也是一大問題,台灣引以為傲、曾催生台積電與聯華電子的工研院,都失去不少經驗豐富的研究人員。
 
 
聯合報╱編譯 王麗娟╱報導

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About mtlin

I'm easygoing and sometimes sentimental, also can be very funny. Geek style but social. A Blogger, a Wikipedian and an Engineer.
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