WiMAX is an opportunity for Taiwan to become leading total solutions provider: Interview with John Hsuan, vice chairman of UMC
Irene Chen, Taipei; Steve Shen, DIGITIMES [Thursday 5 June 2008]
John Hsuan, vice chairman of United Microelectronic Corporation (UMC) and concurrently chairman of Siliconware Precision Industries (SPIL), is a 30-year veteran of the Taiwan IT industry and has witnessed numerous shifts in technological evolution. Of late, Hsuan has been betting on WiMAX technology, committing personal equity investments in two of Taiwan's licensed WiMAX operators - First International Telecom (Fitel) and Global Mobile.
But what is the potential for the WiMAX industry? During a recent interview with Digitimes Hsuan stated that, in his opinion, today's WiMAX industry is better positioned for opportunities than the semiconductor industry was 30 years ago. More excerpts from the interview follow.
Every time a new technology emerges, people always feel that the path leading up to the new technology is bumpy because it brings a threat to existing technologies, and yet there is also frustration due to the uncertainties involved.
However, we see a real opportunity in WiMAX - an opportunity to 'use' a new technology that will enable people to experience the benefits brought in by wireless broadband telecommunications technology.
The Internet allows PCs to connect with PCs, the telephone links people with people, and mobile phones further shorten the linkage. But WiMAX has the ability to combine the PC-to-PC link and the people-to-people link through wireless broadband technology. Therefore, the potential application services that are likely to emerge from WiMAX will be completely different from the service molds available at present.
Long Term Evolution (LTE) technology is generating a lot of discussion, and it is perhaps a good technology, but undoubtedly LTE still needs a long period of time to develop. Conversely, the development of many WiMAX devices is complete and many users are waiting for operators to finish building their WiMAX network infrastructure so that WiMAX services can begin to roll out.
In contrast to the separate development of IT and telecommunications products in the past, WiMAX is a unique technology. Intel has been playing an important role in the promotion of the WiMAX industry with an aim to equip all Intel desktop and notebook platforms with WiMAX capabilities. Since PCs and handsets are currently the two most widely used IT products, the deployment of WiMAX networks will help further expand the use of wireless communication technology among PC users. In addition, handset users, who are already familiar with wireless technology, will gain access to more applications through WiMAX.
For this reason, handheld devices, which are likely to be one of the mainstream technology products in the future, can be regarded as 'MUST' products. The 'M' represents mobility, the 'U' is for ultra-low-cost, ultra-low-weight and ultra-low-power consumption, the 'S' is for small and the 'T' is for thin. WiMAX-enabled devices could also be 'MUST' devices.
People cannot look at the WiMAX industry in the same way as the traditional telecommunications industry. WiMAX is just in its early stages and needs more time for study. My investment in the WiMAX industry is because it has long-term growth potential. The services provided by traditional telecom operators are hard to differentiate from each other and yet they are easily duplicated. But WiMAX is different; WiMAX operators can offer differentiated services. In this regard, WiMAX is already ahead of the traditional telecom industry and has potential for further development.
Regarding the development of the WiMAX industry in Taiwan, Taiwan has already built up a solid foundation and is truly one of the leaders in the segment compared to other countries around the globe.
The major consideration of the six WiMAX licensed operators in Taiwan should not be the number of base stations they want to install or the question of how large the area of their WiMAX service coverage should be. Instead, their most essential task is to offer a complete platform for the launch of sound application services. They should work alongside Taiwan-based equipment makers to come out with application devices that can build up an integrated WiMAX total solution.
Using imagination as well as leveraging WiMAX IP (intellectual property), application services and integration, Taiwan has the ability to create amazing, innovative applications. It will be difficult for WiMAX operators to boost their revenues by expanding the coverage of their WiMAX services, as traditional telecom providers did previously. WiMAX operators should focus on providing their services in areas where most people are gathered such as bus/train stations or convenience store chains.
Someone has said that the domestic market in Taiwan is rather small and that the successful development of a new technology in Taiwan does not necessarily make it a success. WiMAX could be such a technology. However, being small is not a problem. If Taiwan can develop an environment for the successful operation of WiMAX services, the island will lead others in building up WiMAX total solutions, and then it will have the opportunity to sell those solutions to other markets. Previously, Taiwan focused on the sale of hardware products, a model demanding large production scales. However, the value of WiMAX lies in the effectiveness of its system integration, which does not count on production scale but rather timing.
International hotel chains such as Hyatt and Sheraton are able to establish hotels in their brand names worldwide, and that is the way the Taiwan WiMAX industry should go when it is thinking to develop its business globally. The Taiwan WiMAX industry has a better opportunity to create a large market for its products if it can sell its WiMAX operation molds to other markets as turnkey systems.
In contrast to Taiwan's previous concentration on OEM production, WiMAX also provides Taiwan an opportunity as well as an environment to create new products that make the most of its ability to innovate; the development of these so-called 'MUST' products is based on the ability to offer as many as functions as users need.
The Taiwan government is credited with its efforts for the first-stage development of the WiMAX industry in Taiwan, with the implementation of the Mobile Taiwan (M-Taiwan) program as a key policy. However, the deployment of the M-Taiwan program is still based on the point of view of traditional telecom operators.
The government should encourage the six licensed operators to develop an application-based environment. The six licensed operators do not necessarily need to install WiMAX networks independently, and instead they can cooperate and share network resources. The government should also ease its restrictions on the investment in WiMAX in order to encourage more potential investors, because the six WiMAX operators are likely to find it difficult to generate profits in the initial stages.
John Hsuan, vice chairman of UMC
Photo: CJ Liu, Digitimes, June 2008