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Internet Drives Growth in Communications

Communications-related companies in Taiwan are projecting a boom time ahead, beginning this year and continuing well into the next few.

A survey of 300 communications-related companies by the Industrial Technology Research Institute (ITRI) indicated strong industry growth this year and next. ITRI projects that this year the Taiwan communications industry's production value will reach US$4.8 billion which represents 32% growth over 1999. ITRI projects that overseas investment in the industry will grow by an even greater rate. In 2000, the institute estimates foreign investment will expand to US$1.9 billion, double last year's foreign investment.

The great progress of the Internet worldwide has acted as an important engine for growth for Taiwan. CP Chiang, senior consultant of Information Technology Pioneer International explained, "The Internet industry is the real driver behind the local communication industry's high growth rate. This is true worldwide, but Taiwan with its cost-efficient manufacturing is exploiting the worldwide demand for high-performance, yet low-cost, Internet access and capability. The Internet will increase demand for many important communications products made in Taiwan, including modems, mobile phones, PDAs (personal digital assistant), etc. The convergence of these communications technologies and other technologies is being driven by the Internet."

According to ITRI a number of important factors will impact the communications products market growth. The Institute cited the following factors: (1) greater demand for higher value networking products; (2) escalating requirements for a static telecom infrastructure; (3) booming market for broader bandwidth access products; (4) mass production of mobile phones and digital phones; (5) increasing demand of Global Positioning System (GPS) satellite communications products; and (6) price cuts of modem and answering machine products.

Officials at the ITRI and the Institute for Information Industry (III) are prioritizing communications technology R&D; because they believe these technologies will be crucial to sustain Taiwan's position as a leading technology production center.

Manufacturers Ready for 3G

Taiwan's communication companies are also banking on third-generation (3G) mobile phones. Already, leading international mobile phone makers have started investing in Taiwan looking to exploit the island's manufacturing prowess. Ericsson, a leading wireless manufacturer, decided in January to set up a research and development center in Taiwan. Taiwan's Department of Economic Affairs (DEA) will assist the company to locate facilities in the NanKang Software Industrial Park's International Research and Development Center. This move by Ericsson is expected to benefit Taiwanese communications manufacturers who desire to enter the 3G mobile communications field. Other leading mobile manufacturers are expected to make similar investments.

Chiang commented on the potential influence, "New generation mobile phones, starting with the 3G, will incorporate more and more information technology (IT). This is Taiwan's strength. Because these devices must integrate with many of the other IT products that Taiwan produces, the efficiencies of production in Taiwan becomes compelling. In essence these phones will be mini computers and this is an area of production that Taiwan does best."

(John Isacs, Taipei: March 2000 Issue, Nikkei Electronics Asia)


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