Entrepreneurial Engines of Economic Growth around the World
Edited by Jerome S. Engel
Chapter 9: Taiwan: linkage-based Clusters of Innovation – the case of Taiwan’s IT industry
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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