Commentary: What will Ma say to Otellini?
Irene Chen, Taipei; Adam Hwang, DIGITIMES [Tuesday 26 October 2010]
Intel CEO Paul Otellini will visit Taiwan on October 28, and is likely to have a meeting with Taiwan President Ma Ying-jeou. Viewing that Intel has decided to close its WiMAX Program Office (WPO) and has not yet fulfilled a WiMAX MOU it signed with the Taiwan government but, on the other hand, has signed an agreement with Korea-based KT to set up a joint venture to boost WiBro, Korea's home-grown WiMAX technology, Taiwan-based WiMAX players have been more or less dissatisfied and disappointed and are concerned about the motivation of Otellini's visit. If Otellini meets with President Ma, what attitude should the Taiwan government take to best serve the interests of Taiwan's WiMAX industry?
Role of Intel Taiwan questioned
While Taiwan's WiMAX industry has been skeptical of the prospect of cooperation with Intel, Intel does not seem to care too much about this. At the IDF in September, Intel officials told the media that Otellini will visit Taiwan in late October but the visit is on a regular basis rather than for WiMAX specifically. As of mid October, Intel Taiwan had yet to confirm whether Otellini would come to Taiwan.
Intel's attitude makes Taiwan's WiMAX industry wonder how Intel will deal with Taiwan or whether the Intel headquarters understands the actual situation, such as the fact that the closing of the WiMAX office has sent Taiwan's WiMAX industry and government thinking Intel in an increasingly negative way. Judging from this, it seems that there are real problems in the communication between Intel and Taiwan.
Some Taiwan government officials and WiMAX players have the feeling that since Intel dismissed the WiMAX office, Intel Taiwan's role and actions have been too passive to create favorable impressions of Intel. For example, Otellini expressed his willingness to visit Taiwan when he met with Taiwan's minister without portfolio Chang Gin-fu at the Intel headquarters, but Intel Taiwan has been quite ambiguous about Otellini's visit. This has led people to ask whether Intel Taiwan hopes to see Otellini visit Taiwan, and whether it wants Intel to maintain healthier and more positive interactions with Taiwan?
WiMAX MOU with Taiwan stranded; but Intel invests in South Korea
Intel, KT and Samsung Electronics in late September 2010 announced the establishment of the joint venture WiBro Infra, with respective investment of US$20 million, US$56 million and US$52 million. Including investment from KB Investment, the total investment of US$280 million will be used to enhance the WiBro symbiosis system and WiBro infrastructure in South Korea. Noteworthy is that Otellini went to South Korea to sign an MOU for WiBro Infra in late March 2010 and Intel realized its MOU promise in only six months.
In contrast, the Intel-Taiwan MOU to jointly develop WiMAX is still in an unclear situation, with Intel Capital's planned investment in a WiMAX joint venture still under discussion of contract details. The Intel investing arm reportedly is to invest about NT$100 million (US$3.23 million), much less than Intel's investment in WiBro.
Similar to the closing of the WPO, Intel's cooperation with South Korean enterprises and related investments are Intel's internal affairs that Taiwan has no right to question or needs to care about. However, this raises the question about whether Intel gives importance to its Taiwan partners who regard themselves as Intel's important partners.
Some Taiwan-based WiMAX players think that Intel's cooperation with KT and Samsung is a real partnership for developing new technology, whereas Intel does not treat Taiwan as a real partner in WiMAX cooperation but wants Taiwan to ask for benefits from Intel. It may be an exaggeration but Intel in a sense has over the years used a "colonialistic" way to capitalize on Taiwan's highly-integrated ICT supply chain to establish its own kingdom. But how much has Taiwan earned? There are more than five Taiwan-based IT business groups worth US$10 billion each, but they have been struggling for such small margins of 3-4%. In view of the market potential of WiMAX, Taiwan has chosen to stand on the same side of Intel again. But what has become of it?
Intel may not think it fair, but such opinions truly reflect the feelings of Taiwan's WiMAX players. In the development of new technologies such as WiMAX, Taiwan has the ambition to change its position in the global supply chain, but Intel does not seem to see Taiwan as its strategic partners.
It has been reported that Otellini may sign an MOU with Taiwan's Ministry of Economic Affairs (MOEA) for joint development of cloud computing during his visit. Taiwan would welcome such cooperation regardless of Intel's technological capabilities in cloud computing, according some Taiwan-based WiMAX players. But as Intel has not yet realized its WiMAX MOU, these players question the meaning yet another MOU. Does Intel plan to replace the old MOU with a new one? Or is the new MOU meant to be just a cushion to protect it from criticism? What can Taiwan expect from Intel this time? How should Taiwan, in light of Intel's failure to fulfill the WiMAX promise, handle its long-term "partnership" with Intel?
The WiMAX dispute has caught international attention, with an article on TechEye satirizing the WiMAX MOU as "memories of misunderstanding." The Taiwan government must consider how it can solve the problems with Intel because this may be an important indication of Taiwan's governmental efficiency - something that other international enterprises may be watching closely. And this is also a crucial time for Taiwan to work out its strategy for interactions with international corporations.
Ma's meeting a formality only?
Taiwan's WiMAX players differ in opinions as to whether it is necessary for President Ma to meet with Otellini. After what Intel has done, some of them argue that such a meeting may not be necessary if it is just a courtesy call.
But others feel that Otellini's meeting with Ma will mean that Intel still values its cooperation with Taiwan. If Otellini comes with substantial cooperation plans, such as transfer of 4G technologies or 4G R&D projects, Taiwan's evaluation of Intel will improve a great deal. Thus, Taiwan's WiMAX industry actually hopes that the Taiwan government can seize the opportunity to establish healthy and mutually beneficial relationships with Intel.
The meeting will be meaningful if President Ma can completely and precisely express Taiwan's expectations for its relations with Intel based on Taiwan's industrial development strategies, and this is supposed to be the key consideration of the Taiwan government. Intel's acquisition of Infineon's handset business unit and establishment of technological cooperation with Nokia show that Intel is diversifying its development of communication technologies, possibly including WiMAX. If Taiwan wants to have close cooperation with Intel, it should have a more comprehensive strategy for cooperation beyond WiMAX.
Taiwan is expected to have more cooperation with international enterprises for development of domestic WiMAX, 4G or cloud computing industries, and in this sense, the interaction with Intel may serve as a helpful "case study." To solicit cooperation with and investment from international enterprises, Taiwan should have a set of clear and complete road maps for industrial development to avoid a repeat of the embarrassing situation with Intel.