Pegatron chair stresses AI's role in national strength

Bryan Chuang, Taipei; Jerry Chen, DIGITIMES Asia 0


During a recent forum, the Chairman of Taiwan's Pegatron Tzu-Hsien Tung AI computing power has a direct correlation with national strength.

Tung's statement echoes Nvidia CEO Jensen Huang's earlier remarks. The statement underlines Taiwan's central role in the AI revolution.

Tung cited "The Art of War" saying that extensive calculations are key to achieving victory. Extensive calculations are also the bedrock of today's AI computing race.

PwC Taiwan's "2024 Taiwan Business Leaders Survey" revealed nearly 70% globally and over 50% of Taiwan's business leaders believe that AI will impact business and employee development in the next three years. Tung said Taiwan should also foster a new wave of entrepreneurship to invigorate both the industry and society.

Pegatron's diversified supply chain

Tung noted that Taiwanese businesses have gradually withdrawn from China primarily due to rising wages and declining birth rates. This trend was then further accelerated by the US-China trade war.

Over the past 23 years, China's average income has grown fourteenfold. This is a stark contrast to the early days when Taiwanese businesses entered China.

He believes any country entering an era of heightened gender equality experiences a significant decline in birth rates. "China is no exception, with its population on the decline, while Taiwan and South Korea have even lower birth rates," he added.

Upon consideration of the trends of rising wages and declining birth rates in China, Pegatron has moved investments to more overseas nations in response to customer demands. The company now employs tens of thousands of workers in Indonesia, India, and Mexico.

The geopolitical risks

Regarding the restructuring trend in the supply chain, Tung emphasized beyond the factors of geographical locations companies also must pick the right side of the geopolitical conflict. He cited ASML in the Netherlands as an example.

ASML, an instrument integrator, relies on technologies from other countries. More specifically, ASML's machines require optical lenses from Germany and plasma from the United States to operate. Choosing the wrong side and failing to access German and American technologies could mean disruption in ASML's production.

Similarly, Taiwan's chip manufacturing leads globally in sub-7-nanometer technology, integrating technologies from various countries to achieve optimal yield rates. However, if Taiwan aligns with the wrong international political factions, it risks facing technology restrictions.

In such a scenario, Taiwan's semiconductor industry would suffer significant impacts.

Don't put all the eggs in the same basket

Tung believes that Taiwan's industry faces risks of being overly concentrated. He uses the ancient Chinese proverb "If one has a loss, we all lose. If one has a win, we all succeed."

In other words, while having a dominant single industry can concentrate all the developmental resources, it could also entail potential risks. "Taiwan should not solely rely on technological manufacturing but should also strengthen its service industry's ability to explore overseas markets," he says.

Chou Chien-hung, CEO of PwC Taiwan, highlighted the rapid technological breakthroughs of genAI and its ability to disrupt. In this era of uncertainty, he believes companies must act.

To stay at the forefront of innovation, companies need to utilize digital tools to enhance efficiency, explore the potential of new technological changes, and rethink industry resilience in response to climate change and the rise of genAI, said Tung.