Table of Contents

Global Clusters of Innovation

Global Clusters of Innovation

Entrepreneurial Engines of Economic Growth around the World

Edited by Jerome S. Engel

In the geography of the global economy, there are known ‘hot spots’ where new technologies germinate at an astounding rate and pools of capital, expertise and talent foster the development of new industries and new ways of doing business. These clusters of innovation are significant drivers of value creation and function as models for economic expansion in both developed and developing countries. This book explores the key attributes of these innovation hubs using case studies from around the world.

Chapter 9: Taiwan: linkage-based Clusters of Innovation – the case of Taiwan’s IT industry

Chao-Tung Wen and Jun-Ming Chen

Subjects: business and management, entrepreneurship, economics and finance, economics of innovation, innovation and technology, economics of innovation, innovation policy, urban and regional studies, regional economics


Industrial clustering is an important characteristic of development in a number of Taiwanese industries, including the two major industries: personal computers (PC) and semiconductors. Since the 1980s, the modular technology characteristics of the IT industry have led to vertical disintegration in production within global production chains. Due to close relationships with Silicon Valley, Taiwan was fortunate to be involved in this process, and riding this wave during the early stages of development, the PC and semiconductor industries were able to flourish. In the PC industry, for example, initially the government’s careless move in undermining the video game industry by banning video games, coupled with technology trends leading to the modulation of PC production around the globe, encouraged local manufacturers to turn to PC component production and assembly. Opportunities in foundry production on behalf of primarily US brand manufacturers provided training in technical and managerial capacities, allowing Taiwan to play a major role as a supplier in the global computer production network (Ernst, 2000, 2004; Sturgeon, 2002). Regarding semiconductors, the global semiconductor industry structure gradually split into IC design, mask production, wafer fabrication, packaging, and testing shortly after firms introducing semiconductor technology from the USA, such as United Microelectronics Corporation (UMC) and Taiwan Semiconductor Manufacturing Company (TSMC), were established in quick succession.

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