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Taiwan's world-leading economy
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Of the 102 countries surveyed by the World
Economic Forum's The Global Competitiveness Report 2003-2004, Taiwan
was ranked fifth, following Finland, the US, Sweden and Denmark.
One place ahead of Singapore, the island of 23 million people was
ranked as Asia's most competitive economy, well ahead of Japan at
11, South Korea at 20 and China at 44.
For 2004 as a whole, Taiwan's real GDP
expanded 5.71% to NT$10.3 trillion (around US$320 billion). Domestic
demand contributed 5.69 percentage points to the change in real
GDP, with net exports contributing 0.02 percentage points. With
moderate growth in the world economy forecast for 2005, Taiwan's
growth is expected to slow to 4.21% with 2005 GDP estimated by the
government to reach NT$10.8 trillion. Exports counted in the GDP
totaled NT$6.8 trillion, exceeding imports of NT$6.3 trillion by
about 6%.
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The all-important IT and semiconductor
industries
The engine for Taiwan's growth over the
last 25 years has been the island's high-tech industries. In 2004,
Taiwan manufacturers produced IT hardware products valued at over
US$67 billion and semiconductors worth almost US$20 billion. In
addition to leading the world in the production of over 10 different
IT products, such as notebooks and LCD monitors, the island is also
number one for semiconductor foundry and packaging services and
mask-ROM production.
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Taiwan output of IT and networking hardware
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Product
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2004 (bn NT$)
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2004 (m units)
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2005 (m units)
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Global share
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Global rank
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Notebook PC
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21.8
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33.4
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41.50
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72.4%
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1
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Desktop PC
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9.4
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34.7
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36.63
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29.2%
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N/A
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Motherboard
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6.2
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108.0
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112.35
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78.3%
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1
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Server
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1.8
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2.1
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2.43
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32.8%
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2
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LCD monitor
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14.4
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45.7
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63.92
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67.6%
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1
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CDT monitor
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3.5
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35.3
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26.01
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53.6%
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1
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Optical disc drive
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3.5
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105.8
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116.33
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41.7%
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2
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Digital camera
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2.0
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21.2
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23.91
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34.5%
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2
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Switch
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0.7
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129.6
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149.00
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59.0%
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1
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Router
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0.7
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16.6
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18.19
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89.2%
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1
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Cable modem
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0.5
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12.0
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14.56
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66.3%
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1
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xDSL CPE
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1.1
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32.8
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40.11
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70.9%
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1
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WLAN product
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1.3
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61.3
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104.10
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83.0%
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1
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Source: MIC, compiled by DigiTimes.com, March 2005.
With its limited resources, Taiwan has
not achieved all this alone. In 2004, only 9.3% of Taiwan's output
was produced on the island, while 78% was produced in China. Shipments
follow the IT industry, with 29.8% to the US, 28.2% to the EU, 12.3%
to Asia Pacific, 7.6% to Japan, 11.2% to China, 4.1% domestically,
and 6.8% to other regions.
To continue growing, Taiwan is actively
repositioning itself as an R&D and financial center with close China
ties.
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Enterprise structure
According to Taiwan's Department of Reconstruction
(MOEA), Taiwan had over 602,000 registered companies in 2004. Other
associations give figures of just over a million companies, but
all agree that the vast majority (over 98%) are small to medium-size
enterprises. Around 7,000 of Taiwan's companies participate directly
in the IT industry and about 1,300 of these are publicly declared
companies that are already trading or wish to be traded on the island's
stock exchanges. Over 400 of these are listed on the main Taiwan
Stock Exchange (TSE), over 300 on the Over-the-Counter (OTC) market
and over 200 on the Emerging Stock Board (ESB).
When the bulk of Taiwan's production was
handled on the island, companies grew up in clusters, creating a
vertically-integrated supply chain that became Taiwan's global
advantage. As production has shifted to China, Taiwan has reproduced
the clusters, first in the south in Guandong Province and then near
Shanghai, Beijing and in other areas. However, Taiwan's government
has controlled the move west and retained leading edge technology
in Taiwan. A major part of this leading edge technology is contributed
by Taiwan's semiconductor and displays industries. To promote these
two industries, Taiwan formulated a "Two trillion, Twin star" project
that aims to encourage them to grow to NT$1.59 trillion (almost
US$50 billion) and NT$1.37 trillion (almost US$43 billion), respectively,
by 2006. A separate plan aims to promote the island's telecom industry
to become a billion US$ business by 2008.
The best known "cluster" in Taiwan is the
Hsinchu Science Park (HSP). Founded in 1980, this park now hosts
over 370 companies and generates around NT$80 billion (over US$2.5
billion) in sales from high-tech industries each month. Over two-thirds
of this amount is now from semiconductors.
Following success of the HSP, the government
established the Southern Taiwan Science Park (STSP) in Tainan in
1995. Beginning operations in July 1997, this park opened an "extension"
in Kaohsiung, about 30km away, in 2001. In 2004, STSP generated
average sales of almost NT$13 billion (over US$400 million) each
month from January to October. Over 65% of this came from optoelectronics
production.
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Sales generated by Taiwan's science parks (NT$ billion)
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Sector
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HSP
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STSP
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Firms
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Oct-04 YTD
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2003
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Firms
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Oct-04 YTD
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2003
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ICs
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159
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493.8
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563.3
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9
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68.6
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60.9
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IT hardware
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57
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91.6
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134.8
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2
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0.7
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0.1
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Telecom
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53
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40.4
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56.5
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10
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0.7
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0.7
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Opto
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60
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88.4
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94.3
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23
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143.3
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89.7
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Precision Machinery
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21
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5.8
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5.8
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12
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3.5
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3.3
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Biotech
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27
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1.6
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1.8
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11
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1.0
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0.5
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Total
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377
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721.7
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856.5
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67
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217.7
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155.2
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Source: Science park administrations, compiled by DigiTimes, March 2005.
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