Taiwan Boosts High-Tech Efforts

THE ``Made in Taiwan'' label, ubiquitous on cheap electronic goods, increasingly applies to space-age technology - evidence that the Republic of China might become the West's next high-technology challenger. Taiwan's cabinet recently earmarked $1.6 billion (Taiwanese; US$436 million), of which $600 million came from the Bank of Communications, for investment in high technology.

``For the next five years, our major efforts will be concentrated in catching up with developed countries in terms of high technology,'' said Yu-Hwan Lin, assistant to the president of the Industrial Technology Research Institute (ITRI).

Taiwanese companies are abandoning their copycat image to don the innovator's robes.

Microelectronics Technology Inc. (MTI), for example, started as the vision of eight Taiwanese engineers successfully employed in Silicon Valley's microwave technology industry. In 1983, they decided to return home and start the first microwave communications company in Taiwan.

Now, MTI has the world's largest share of the market for microwave circuits for satellite communications.

``When we started in 1983, most American companies in the microwave industry were too busy with the military market to pay attention to the commercial applications of microwave technology,'' says Chi Hsieh, president of MTI. ``We found the niche.''

In 1984, MTI jumped on the home satellite bandwagon to produce down converters (the part that takes the signal from the satellite dish and converts it to TV frequency), their sales sprang from US$700,000 to US$7 million. The following year, following deregulation in the United States telecommunications industry, the company found another niche: digital radios. The company predicts sales for 1990 will be up about 23 percent from last year's US$49 million.

Of MTI's 650 employees, more than 100 are engineers and technicians.

Some studies find almost 10 percent of Taiwan's work force has engineering training. Each year about 10,000 students graduate from engineering schools.

High-tech companies like MTI are allocating an increasing share of their revenue to research and development. But at present, more than 90 percent of corporate Taiwan is composed of small or medium-size companies, and most firms are unable to risk investing too much money in research, said Andrew Wang, chairman of the government's Industrial Technology Investment Corporation, which specializes in importing foreign know-how.

``We cannot afford to put in too much `R' [research], because we are a commercial company and we need to make profits in order to go on,'' Hsieh says.

Many technological advances are acquired through direct foreign investment. Recently, for example, a Taiwanese government and business consortium bought the US's Wyse Technology Inc. MTI owns 66 percent of the US-based Mobile Telesystem Inc., a company that produces lightweight portable satellite communication systems.

And with softening regulations in the local stock market, more high-tech companies are going public to raise capital. MTI began trading on Taipei's stock exchange last month.

Meanwhile, the government hopes that Taiwan's high-tech companies will begin manufacturing parts and components for the aerospace and high-definition TV industries. Some progress is already evident. Microtek International Inc. came out with a scanner that feeds both black-and-white and color pictures in a computer; the device hit the market long before competitors.

Still, much of ``Taiwan private industry would rather be a fast follower than a pathfinder,'' Mr. Wang says.

In recent years, Taiwan's economy has seen both a double-digit growth rate and a 54.7 percent appreciation of the New Taiwan dollar versus its US counterpart, which partially erased the cost advantage of Taiwan's exports.

Firms were confronted by rising labor costs, higher real estate prices, and increasingly strict pollution controls. Some companies, unable to cope with the changes, relocated where labor was cheaper. Taiwanese investment in Thailand, Malaysia, Indonesia, and the Philippines reached US$1.96 billion in 1989, an 11 percent increase from 1988.