A Silicon Valley of the East: Creating Taiwan's semiconductor industry

California Management Review

Volumn , Issue 4, 1997, Pages 26-54

  Mathews, John A ^a  

^a NONE

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EID: 0031527404     PISSN: 00081256     EISSN: None     Source Type: Journal    
DOI: 10.2307/41165909     Document Type: Review

References (63)

1. See Charles Ferguson and Charles Morris, Computer Wars: The Fall of IBM and the Future of Global Technology (New York, NY: Times Books, 1993). Ferguson and Morris, two harsh critics of the Japanese and Korean approach to the promotion of the computer and IT industries, nevertheless view Taiwan favorably as the "next Silicon Valley." In the context of a discussion of high-technology strategies by Silicon Valley-type entrepreneurial firms, which they see as the saviors of American high-technology industries, they state: "The Silicon Valley model firm is obviously not one for the fainthearted, nor is it suited for every industry. To date, however, America is the only country that has mastered it. We expect Taiwan to be the second; its population has a strong entrepreneurial tradition and close relations with the California business and educational system." [p. 179.]
2. See Homa Bahrami and Stuart Evans, "Flexible Re-Cycling and High-Technology Entrepreneurship," California Management Review, 37/3 (Spring 1995): 62-89. The constituents of the Silicon Valley ecosystem that they highlight are venture capitalists, a talent pool of knowledge professionals, universities and research institutes, a sophisticated service infrastructure, as well as customers and lead users of innovative technologies. Other scholars - such as AnnaLee Saxenian, "Regional Networks and the Resurgence of Silicon Valley," California Management Review, 33/1 (Fall 1990): 89-112; and ibid., ***"The Origins and Dynamics of Production Networks in Silicon Valley," Research Policy, 20 (1991): 423-437 - have emphasized the dynamism of Silicon Valley stemming from close collaboration between systems houses and various forms of specialized suppliers, e.g., of application-specific integrated circuits.
3. See Homa Bahrami and Stuart Evans, "Flexible Re-Cycling and High-Technology Entrepreneurship," California Management Review, 37/3 (Spring 1995): 62-89. The constituents of the Silicon Valley ecosystem that they highlight are venture capitalists, a talent pool of knowledge professionals, universities and research institutes, a sophisticated service infrastructure, as well as customers and lead users of innovative technologies. Other scholars - such as AnnaLee Saxenian, "Regional Networks and the Resurgence of Silicon Valley," California Management Review, 33/1 (Fall 1990): 89-112; and ibid., ***"The Origins and Dynamics of Production Networks in Silicon Valley," Research Policy, 20 (1991): 423-437 - have emphasized the dynamism of Silicon Valley stemming from close collaboration between systems houses and various forms of specialized suppliers, e.g., of application-specific integrated circuits.
4. See Homa Bahrami and Stuart Evans, "Flexible Re-Cycling and High-Technology Entrepreneurship," California Management Review, 37/3 (Spring 1995): 62-89. The constituents of the Silicon Valley ecosystem that they highlight are venture capitalists, a talent pool of knowledge professionals, universities and research institutes, a sophisticated service infrastructure, as well as customers and lead users of innovative technologies. Other scholars - such as AnnaLee Saxenian, "Regional Networks and the Resurgence of Silicon Valley," California Management Review, 33/1 (Fall 1990): 89-112; and ibid., ***"The Origins and Dynamics of Production Networks in Silicon Valley," Research Policy, 20 (1991): 423-437 - have emphasized the dynamism of Silicon Valley stemming from close collaboration between systems houses and various forms of specialized suppliers, e.g., of application-specific integrated circuits.
5. See Homa Bahrami and Stuart Evans, "Flexible Re-Cycling and High-Technology Entrepreneurship," California Management Review, 37/3 (Spring 1995): 62-89. The constituents of the Silicon Valley ecosystem that they highlight are venture capitalists, a talent pool of knowledge professionals, universities and research institutes, a sophisticated service infrastructure, as well as customers and lead users of innovative technologies. Other scholars - such as AnnaLee Saxenian, "Regional Networks and the Resurgence of Silicon Valley," California Management Review, 33/1 (Fall 1990): 89-112; and ibid., ***"The Origins and Dynamics of Production Networks in Silicon Valley," Research Policy, 20 (1991): 423-437 - have emphasized the dynamism of Silicon Valley stemming from close collaboration between systems houses and various forms of specialized suppliers, e.g., of application-specific integrated circuits.
6. Ferguson and Morris, op. cit., 179.
7. On Taiwan's industrial development strategy, and the influence of public sector agencies, see C. Schive, "The Next Stage of Industrialization in Taiwan and Korea," in G. Gereffi and D. Wyman, eds., Manufacturing Miracles: Paths of Industrialization in Latin America and East Asia (Princeton, NJ: Princeton University Press, 1989); and R. Wade, Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization (Princeton, NJ: Princeton University Press, 1990).
8. On Taiwan's industrial development strategy, and the influence of public sector agencies, see C. Schive, "The Next Stage of Industrialization in Taiwan and Korea," in G. Gereffi and D. Wyman, eds., Manufacturing Miracles: Paths of Industrialization in Latin America and East Asia (Princeton, NJ: Princeton University Press, 1989); and R. Wade, Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization (Princeton, NJ: Princeton University Press, 1990).
9. Estimates of growth in the world market for semiconductors are taken from market research firms, Dataquest, and ICE: Status 1996: Report on the Integrated Circuit Industry (Scottsdale, AZ: Integrated Circuit Engineering Corp, 1996). Reliable statistics on the Taiwan semiconductor industry are published each year (in Chinese) by ERSO, in the Semiconductor Industry Yearbook. An English summary was published by ERSO for the year 1994. Further statistics are published by the Market Intelligence Center (MIC) of the Institute for Information Industry (III), Taiwan.
10. See for example J. Utterback and F. Suarez, "Innovation, Competition and Industry Structure," Research Policy, 22 (1993): 1-21.
11. See A. Van de Ven and R. Garud, "A Framework for Understanding the Emergence of New Industries," Research on Technological Innovation, Management and Policy 4 (1989): 195-225; and ***ibid, "Innovation and Industry Development: The Case of Cochlear Implants," Research on Technological Innovation, Management and Policy 5 (1993): 1-46, for a discussion of the emergence of industries as "systems" or complexes of many institutional actors and firms which provide each other with complementary support and competition.
12. See A. Van de Ven and R. Garud, "A Framework for Understanding the Emergence of New Industries," Research on Technological Innovation, Management and Policy 4 (1989): 195-225; and ***ibid, "Innovation and Industry Development: The Case of Cochlear Implants," Research on Technological Innovation, Management and Policy 5 (1993): 1-46, for a discussion of the emergence of industries as "systems" or complexes of many institutional actors and firms which provide each other with complementary support and competition.
13. See A. Van de Ven and R. Garud, "A Framework for Understanding the Emergence of New Industries," Research on Technological Innovation, Management and Policy 4 (1989): 195-225; and ***ibid, "Innovation and Industry Development: The Case of Cochlear Implants," Research on Technological Innovation, Management and Policy 5 (1993): 1-46, for a discussion of the emergence of industries as "systems" or complexes of many institutional actors and firms which provide each other with complementary support and competition.
14. E. Rogers, Diffusion of Innovations, fourth edition (New York, NY: The Free Press, 1995) is the definitive treatment of this subject. But this updated edition still has no entries for Taiwan, Korea, or any other East Asian case of managed technological diffusion.
15. Hsinchu is in fact an apposite name; its Chinese characters mean "new shoot" - as in new bamboo shoots. What has been created at Hsinchu SBIP is indeed a number of high-tech "new shoots" which have since flourished.
16. Hsinchu was created at the same time as other "Technopolises" or "Technopoles" were being created in industrial countries such as Japan and France; its relative success as a dynamic cluster owes much to this careful provision of infrastructure and social services, as much as to agglomeration effects that are potentially available in all high-tech park developments.
17. The full range of ITRI's activities covers the following areas: electronics and semiconductors (ERSO); computer and communications (CCL); optoelectronics (OESL); metrology (CMS); industrial chemicals (UCL); energy and resources (ERL); machinery (MIRL); advanced materials (MRL); industrial pollution control (CPCT); industrial safety and health (CISHT); and aerospace (CAST).
18. For a description by ITRI's own senior staff members, see O. Lin, C.T. Shih, and J.C. Yang, eds., Development and Transfer of Industrial Technology (Amsterdam: Elsevier, 1994).
19. On the concept of economic learning, see B.A. Lundvall and B. Johnson, "The Learning Economy," Journal of Industry Studies, 1/2 (1994): 23-42; and J. Mathews, "Organizational Foundations of Economic Learning," Human Systems Management, 15 (1996): 113-124. Alice Amsden, in her 1989 book on Korea[Asia's Next Giant (New York NY: Oxford University Press)] speaks of Korea's strategy of "industrialization through learning." The focus in all such accounts is on the exchange and uptake of knowledge resources as the means through which firms and industrial sectors acquire enhanced technological capabilities.
20. On the concept of economic learning, see B.A. Lundvall and B. Johnson, "The Learning Economy," Journal of Industry Studies, 1/2 (1994): 23-42; and J. Mathews, "Organizational Foundations of Economic Learning," Human Systems Management, 15 (1996): 113-124. Alice Amsden, in her 1989 book on Korea[Asia's Next Giant (New York NY: Oxford University Press)] speaks of Korea's strategy of "industrialization through learning." The focus in all such accounts is on the exchange and uptake of knowledge resources as the means through which firms and industrial sectors acquire enhanced technological capabilities.
21. On the concept of economic learning, see B.A. Lundvall and B. Johnson, "The Learning Economy," Journal of Industry Studies, 1/2 (1994): 23-42; and J. Mathews, "Organizational Foundations of Economic Learning," Human Systems Management, 15 (1996): 113-124. Alice Amsden, in her 1989 book on Korea[Asia's Next Giant (New York NY: Oxford University Press)] speaks of Korea's strategy of "industrialization through learning." The focus in all such accounts is on the exchange and uptake of knowledge resources as the means through which firms and industrial sectors acquire enhanced technological capabilities.
22. For a more detailed exposition of this evolution, see J.A. Mathews, High-Technology Industrialization in East Asia: The Case of the Semiconductor Industry in Taiwan and Korea, Contemporary Economic Issues Series, No. 4 (Taipei: Chung-Hua Institution for Economic Research, 1995); and J.A. Mathews, "High-Technology Industrialisation in East Asia," Journal of Industry Studies, 3/2 (1996): 1-77.
23. For a more detailed exposition of this evolution, see J.A. Mathews, High-Technology Industrialization in East Asia: The Case of the Semiconductor Industry in Taiwan and Korea, Contemporary Economic Issues Series, No. 4 (Taipei: Chung-Hua Institution for Economic Research, 1995); and J.A. Mathews, "High-Technology Industrialisation in East Asia," Journal of Industry Studies, 3/2 (1996): 1-77.
24. Van de Ven and Garud, op. cit., likewise posit four phases for the emergence and maturation of a new industry. Their phases are: creation of resource endowment; appropriation of public knowledge by private firms; industry expansion; and industry stabilization. Phases three and four of the framework given in this article correspond almost exactly to those of Van de Ven and Garud. Phases one and two differ insofar as we are discussing an industry that is created by deliberate seeding and forced diffusion, rather than spontaneous emergence.
25. On the development of Taiwan's semiconductor industry, and government's role in its foundation, see the following as representative: P.L. Chang, C.T. Shih, and C.W. Hsu, "The Formation Process of Taiwan's IC Industry - Method of Technology Transfer," Technovation, 14/3 (1994): 161-171; C. Meaney, "State Policy and the Development of Taiwan's Semiconductor Industry," in J.D. Aberbach, D. Dollar and K.L. Sokoloff, edS., The Role of the State in Taiwan's Development (Armonk, NY: M.E. Sharpe, 1994); and C.Y. Liu, "Government's Role in Developing High-Technology Industry: The Case of Taiwan's Semiconductor Industry," Technovation, 13/5 (1993): 299-309. On the national institutional system that has underpinned the semiconductor effort, see C.M. Hou and San Gee, "National Systems Supporting Technical Advance in Industry: The Case of Taiwan," in R. Nelson, ed., National Innovation Systems: A Comparative Analysis (New York, NY: Oxford University Press, 1993).
26. On the development of Taiwan's semiconductor industry, and government's role in its foundation, see the following as representative: P.L. Chang, C.T. Shih, and C.W. Hsu, "The Formation Process of Taiwan's IC Industry - Method of Technology Transfer," Technovation, 14/3 (1994): 161-171; C. Meaney, "State Policy and the Development of Taiwan's Semiconductor Industry," in J.D. Aberbach, D. Dollar and K.L. Sokoloff, edS., The Role of the State in Taiwan's Development (Armonk, NY: M.E. Sharpe, 1994); and C.Y. Liu, "Government's Role in Developing High-Technology Industry: The Case of Taiwan's Semiconductor Industry," Technovation, 13/5 (1993): 299-309. On the national institutional system that has underpinned the semiconductor effort, see C.M. Hou and San Gee, "National Systems Supporting Technical Advance in Industry: The Case of Taiwan," in R. Nelson, ed., National Innovation Systems: A Comparative Analysis (New York, NY: Oxford University Press, 1993).
27. On the development of Taiwan's semiconductor industry, and government's role in its foundation, see the following as representative: P.L. Chang, C.T. Shih, and C.W. Hsu, "The Formation Process of Taiwan's IC Industry - Method of Technology Transfer," Technovation, 14/3 (1994): 161-171; C. Meaney, "State Policy and the Development of Taiwan's Semiconductor Industry," in J.D. Aberbach, D. Dollar and K.L. Sokoloff, edS., The Role of the State in Taiwan's Development (Armonk, NY: M.E. Sharpe, 1994); and C.Y. Liu, "Government's Role in Developing High-Technology Industry: The Case of Taiwan's Semiconductor Industry," Technovation, 13/5 (1993): 299-309. On the national institutional system that has underpinned the semiconductor effort, see C.M. Hou and San Gee, "National Systems Supporting Technical Advance in Industry: The Case of Taiwan," in R. Nelson, ed., National Innovation Systems: A Comparative Analysis (New York, NY: Oxford University Press, 1993).
28. On the development of Taiwan's semiconductor industry, and government's role in its foundation, see the following as representative: P.L. Chang, C.T. Shih, and C.W. Hsu, "The Formation Process of Taiwan's IC Industry - Method of Technology Transfer," Technovation, 14/3 (1994): 161-171; C. Meaney, "State Policy and the Development of Taiwan's Semiconductor Industry," in J.D. Aberbach, D. Dollar and K.L. Sokoloff, edS., The Role of the State in Taiwan's Development (Armonk, NY: M.E. Sharpe, 1994); and C.Y. Liu, "Government's Role in Developing High-Technology Industry: The Case of Taiwan's Semiconductor Industry," Technovation, 13/5 (1993): 299-309. On the national institutional system that has underpinned the semiconductor effort, see C.M. Hou and San Gee, "National Systems Supporting Technical Advance in Industry: The Case of Taiwan," in R. Nelson, ed., National Innovation Systems: A Comparative Analysis (New York, NY: Oxford University Press, 1993).
29. This arrangement made sense for RCA. A once-great U.S. technology corporation, it had already withdrawn from the computer business and was starting to withdraw from the chips business. Its 7-micron technology, at a time when the world's best firms were approaching 1.5 micron or even finer resolutions, was completely obsolete, and the chance to earn some royalties from its sale would have been hard to resist.
30. This modular process goes by the technical name SMIF - standard mechanical interface. Its innovation lies in conducting cleanroom operations within small, modular "pods" which have a standard interface with each other; this is much more cost-effective than having to maintain whole workrooms in a state of ultra-cleanliness, and it lends greater flexibility to the production process. TSMC was one of the first wafer fabrication plants in the world to install SMIF process technology, and it has derived immense benefits from this innovation. For a technical description of SMIF technology and its advantages, see C.Y. Shu and L.C. Tu, "Designing, Operating a Submicron Facility with Isolation Technology," Microcontamination (March 1992).
31. This is the "latecomer" effect at work, where later entrants are able to draw advantages from having access to a broader range of technical options than earlier entrants. They must be able to dispose of some competitive advantage in order to enjoy these latecomer benefits; in Taiwan's case it was low manufacturing costs and manufacturing efficiencies.
32. Personal interview at Hsinchu, October 1994.
33. Masks are needed for each level of the circuit that is to be embedded in silicon; they are a central feature of the photolithography process for producing ICs.
34. On "absorptive capacity" see W. Cohen and D. Levinthal, "Absorptive Capacity: A New Perspective on Learning and Innovation," Administrative Science Quarterly, 35 (1990): 128-152. Cohen and Levinthal introduce the concept to capture the "receptivity" of the firm to external sources of knowledge or technique; they see it as the outcome of strategic expenditure on the part of the firm, broadening its capabilities and its possible lines of business. For our purposes, we can see the operation of ITRI as enhancing the absorptive capacity of the Taiwanese industry as a whole and preparing private sector firms for their technology leverage activities.
35. See for example the exposition of this approach to management strategy, in R. Grant, "The Resource-Based Theory of Competitive Advantage: Implications for Strategy Formulation," California Management Review, 33/3 (Spring 1991): 114-135. On the centrality of firm capabilities for the formulation and implementation of strategy, see D. Teece, G. Pisano, and A. Shuen, "Firm Capabilities, Resources, and the Concept of Strategy," Foreign Investment and Economic Growth (Calgary: University of Calgary Press, 1991).
36. See for example the exposition of this approach to management strategy, in R. Grant, "The Resource-Based Theory of Competitive Advantage: Implications for Strategy Formulation," California Management Review, 33/3 (Spring 1991): 114-135. On the centrality of firm capabilities for the formulation and implementation of strategy, see D. Teece, G. Pisano, and A. Shuen, "Firm Capabilities, Resources, and the Concept of Strategy," Foreign Investment and Economic Growth (Calgary: University of Calgary Press, 1991).
37. For a discussion of "resource leverage," see C.K. Prahalad and G. Hamel, "The Core Competence of the Corporation," Harvard Business Review (May-June 1990): 79-91. For an exposition of much of the research that lay behind this article, see Hamel's Ph.D. dissertation, G. Hamel, "Competitive Collaboration: Learning, Power and Dependence in International Strategic Alliances," unpublished Ph.D. dissertation, Department of Business Administration, University of Michigan, 1990. For a more recent exposition of their views, which have strong applicability to the experiences of East Asian firms, see their book, G. Hamel and C.K. Prahalad Competing for the Future (Boston, MA: Harvard Business School Press, 1994).
38. For a discussion of "resource leverage," see C.K. Prahalad and G. Hamel, "The Core Competence of the Corporation," Harvard Business Review (May-June 1990): 79-91. For an exposition of much of the research that lay behind this article, see Hamel's Ph.D. dissertation, G. Hamel, "Competitive Collaboration: Learning, Power and Dependence in International Strategic Alliances," unpublished Ph.D. dissertation, Department of Business Administration, University of Michigan, 1990. For a more recent exposition of their views, which have strong applicability to the experiences of East Asian firms, see their book, G. Hamel and C.K. Prahalad Competing for the Future (Boston, MA: Harvard Business School Press, 1994).
39. For a discussion of "resource leverage," see C.K. Prahalad and G. Hamel, "The Core Competence of the Corporation," Harvard Business Review (May-June 1990): 79-91. For an exposition of much of the research that lay behind this article, see Hamel's Ph.D. dissertation, G. Hamel, "Competitive Collaboration: Learning, Power and Dependence in International Strategic Alliances," unpublished Ph.D. dissertation, Department of Business Administration, University of Michigan, 1990. For a more recent exposition of their views, which have strong applicability to the experiences of East Asian firms, see their book, G. Hamel and C.K. Prahalad Competing for the Future (Boston, MA: Harvard Business School Press, 1994).
40. To understand the motives of the U.S. firms involved, see D. Mowery, "International Collaborative Ventures and the Commercialization of New Technologies," in N. Rosenberg, R. Landau, and D. Mowery, eds., Technology and the Wealth of Nations (Stanford, CA: Stanford University Press, 1992).
41. On "combinative capabilities" and their strategic significance for the firm, see B. Kogut and U. Zander, "Knowledge of the Firm, Combinative Capabilities, and the Replication of Technology," Organization Science, 3 (1992): 383-397.
42. See M. Cusumano and D. Elenkov, "Linking International Technology Transfer with Strategy and Management: A Literature Commentary," Research Policy, 23 (1994): 195-215, for a discussion of these two streams of scholarship which have rarely touched and fertilized each other. On "technology strategy" and its significance for the firm, see R. Burgelman and R. Rosenbloom, "Technology Strategy: An Evolutionary Process Perspective," Research on Technological Innovation, Management and Policy 4 (1989): 1-23. On "technological capabilities" in a developmental context, using the case of Singapore, see M. Fransman, "Promoting Technological Capability in the Capital Goods Sector: The Case of Singapore," Research Policy, 13 (1984): 33-54. On technological "platforms," see D. Simon, "International and Transborder Movement of Technology: A Dialectic Perspective," in T. Agmon and M. von Glinow, eds., Technology Transfer in International Business (Oxford: Oxford University Press, 1991).
43. See M. Cusumano and D. Elenkov, "Linking International Technology Transfer with Strategy and Management: A Literature Commentary," Research Policy, 23 (1994): 195-215, for a discussion of these two streams of scholarship which have rarely touched and fertilized each other. On "technology strategy" and its significance for the firm, see R. Burgelman and R. Rosenbloom, "Technology Strategy: An Evolutionary Process Perspective," Research on Technological Innovation, Management and Policy 4 (1989): 1-23. On "technological capabilities" in a developmental context, using the case of Singapore, see M. Fransman, "Promoting Technological Capability in the Capital Goods Sector: The Case of Singapore," Research Policy, 13 (1984): 33-54. On technological "platforms," see D. Simon, "International and Transborder Movement of Technology: A Dialectic Perspective," in T. Agmon and M. von Glinow, eds., Technology Transfer in International Business (Oxford: Oxford University Press, 1991).
44. See M. Cusumano and D. Elenkov, "Linking International Technology Transfer with Strategy and Management: A Literature Commentary," Research Policy, 23 (1994): 195-215, for a discussion of these two streams of scholarship which have rarely touched and fertilized each other. On "technology strategy" and its significance for the firm, see R. Burgelman and R. Rosenbloom, "Technology Strategy: An Evolutionary Process Perspective," Research on Technological Innovation, Management and Policy 4 (1989): 1-23. On "technological capabilities" in a developmental context, using the case of Singapore, see M. Fransman, "Promoting Technological Capability in the Capital Goods Sector: The Case of Singapore," Research Policy, 13 (1984): 33-54. On technological "platforms," see D. Simon, "International and Transborder Movement of Technology: A Dialectic Perspective," in T. Agmon and M. von Glinow, eds., Technology Transfer in International Business (Oxford: Oxford University Press, 1991).
45. See M. Cusumano and D. Elenkov, "Linking International Technology Transfer with Strategy and Management: A Literature Commentary," Research Policy, 23 (1994): 195-215, for a discussion of these two streams of scholarship which have rarely touched and fertilized each other. On "technology strategy" and its significance for the firm, see R. Burgelman and R. Rosenbloom, "Technology Strategy: An Evolutionary Process Perspective," Research on Technological Innovation, Management and Policy 4 (1989): 1-23. On "technological capabilities" in a developmental context, using the case of Singapore, see M. Fransman, "Promoting Technological Capability in the Capital Goods Sector: The Case of Singapore," Research Policy, 13 (1984): 33-54. On technological "platforms," see D. Simon, "International and Transborder Movement of Technology: A Dialectic Perspective," in T. Agmon and M. von Glinow, eds., Technology Transfer in International Business (Oxford: Oxford University Press, 1991).
46. On East Asian business and organizational structures, from a social-economic perspective, see G. Hamilton and N. Woolsey Biggart, "Market, Culture and Authority A Comparative Analysis of Management and Organization in the Far East," in M. Granovetter and R. Swedbury, eds., The Sociology of Economic Life (Boulder, CO: Westview Press, 1992).
47. This is a Schumpeterian perspective, seeing the process of innovation as unleashing "creative gales of destruction" through the economy, each of which creates opportunities for the well-prepared latecomer. See J. A. Schumpeter, "The Instability of Capitalism," Economic Journal, 38/151 (1928): 361-386, for the classic exposition of this process.
48. Some of these include Unicorn (initial window on VLSI technology); Elite Semiconductor Systems (for memory chips); Integrated Silicon Solutions (for cache memory controllers); Bright Microelectronics; and Catalyst Semiconductor Inc, for flash memory ICs; and the list goes on. In many of these firms, such as ISS, Meridian, and Aries Research, UMC has cemented the partnership by taking an equity position in the company.
49. TSMC has entered into similar arrangements with Japanese giants such as Fujitsu and NEC. In 1994, TSMC entered into a long-term agreement for fabrication and supply of microcontroller chips, application-specific ICs (ASICs) and other logic ICs for Fujitsu, with the Japanese company agreeing as part of the deal to transfer the required 1.0-micron and 0.5-micron process technology. Production got under way in 1995. More recently, TSMC entered into a long-term foundry agreement with NEC, covering many of its ASIC products, with again the Japanese firm transferring the required technology. These arrangements make sense for the Japanese firms as they move on to new products, but need to maintain production of a full product range. The advantage for TSMC is clear: it leverages the relevant process technologies, and thus expands its own platform of technological competences.
50. These arrangements include agreements for sourcing the following technologies: flash memory technology - from SST; ASIC design technology and library of designs - from NCR-MPD (now Symbios Logic); PA-RISC technology - from Hewlett-Packard; multimedia image compression technology - from C-Cube Microsystems; and chipset technology - from Symphony Lab.
51. On the technology alliances, see L. Weiss and J. Mathews, "Innovation Alliances in Taiwan: A Coordinated Approach to Developing and Diffusing Technology," Journal of Industry Studies, 1/2 (1994): 91-101. On the New PC consortium in particular, see J. Mathews and T. Poon, "Innovation Alliances in Taiwan: The Case of the New PC Consortium," Industry in Free China, LXXXIV/6 (1995): 43-58.
52. On the technology alliances, see L. Weiss and J. Mathews, "Innovation Alliances in Taiwan: A Coordinated Approach to Developing and Diffusing Technology," Journal of Industry Studies, 1/2 (1994): 91-101. On the New PC consortium in particular, see J. Mathews and T. Poon, "Innovation Alliances in Taiwan: The Case of the New PC Consortium," Industry in Free China, LXXXIV/6 (1995): 43-58.
53. On some of the shortcomings of the early alliances, see J.C. Wang, "Cooperative Research in a Newly Industrialized Country: Taiwan," Research Policy, 23 (1994): 697-711.
54. Ferguson and Morris, op. cit., 113-114.
55. Ferguson and Morris, op. cit., 113.
56. In the 1990s, this is starting to encompass microprocessors as well - although progress in this sector is slow, and UMC has burnt its fingers trying to develop and market clones of Intel microprocessors. But leading U.S. firms (such as AMD and Cyrix) that pursued a cloning strategy have also found the going tough in this sector.
57. See for example recent articles by Hobday, such as M. Hobday, "East Asian Latecomer Firms: Learning the Technology of Electronics," World Development, 23/7 (1995): 1171-1193; and the book, M. Hobday, Innovation in East Asia: The Challenge to Japan (Aldershot, UK: Edward Elgar, 1995).
58. See for example recent articles by Hobday, such as M. Hobday, "East Asian Latecomer Firms: Learning the Technology of Electronics," World Development, 23/7 (1995): 1171-1193; and the book, M. Hobday, Innovation in East Asia: The Challenge to Japan (Aldershot, UK: Edward Elgar, 1995).
59. See S. Schnaars, Managing Imitation Strategies: How Later Entrants Seize Markets from Pioneers (New York, NY: The Free Press, 1994).
60. See L. Weiss, "Governed Interdependence: Rethinking the Government-Business Relationship in East Asia," The Pacific Review, 8/4 (195): 589-616.
61. This is a case where regional development policy is reinforcing industry development policy - a goal which many countries have found difficult to achieve. See A. Markusen, "Interaction between Regional and Industrial Policies: Evidence from Four Countries," Proceedings of the World Bank Annual Conference on Development Economics 1994 (Washington, DC: World Bank, 1995) and Michael Porter's comments, op. cit.
62. This is a case where regional development policy is reinforcing industry development policy - a goal which many countries have found difficult to achieve. See A. Markusen, "Interaction between Regional and Industrial Policies: Evidence from Four Countries," Proceedings of the World Bank Annual Conference on Development Economics 1994 (Washington, DC: World Bank, 1995) and Michael Porter's comments, op. cit.
63. And, of course, in line with the requirements of the World Trade Organization.