How many opportuni-ties are there in one lifetime to see history being made in high-tech industry? A constantly changing panorama of people, events, and physical features, brimming with the spirit and energy of life-for many people, this is their first impression of the Southern Taiwan Science Park (STSP).
Not more than 20 minutes after entering the park in Tainan County's Sinshih Township, I hear the guide explain that the seemingly placid grounds, which cover over 1000 hectares, actually conceal innumerable pipes and cables conveying water, electricity and telecommunications signals to the factories of roughly 100 companies that run all year, 24 hours a day. On the way to the park, I had memorized information on production volumes, the size of the workforces and machinery installed there. But five minutes ago, from a pile of still-warm report photocopies, I discovered that current statistics paint an even more remarkable picture.
As of May 2004, the park employed more than 27,000 people, and a total of 137 vendors had been approved to operate in the park. Sixty-two of these vendors have already begun mass production, while 17 are building factories. Last year, the total revenues of the park's tenants were NT$155.3 billion, and this year's revenues are forecast to climb to NT$300 billion, with the combined workforces of the resident companies surpassing 30,000.
Even by the standards of urbanites accustomed to fast-paced lifestyles, the park's leaps forward are surprising. Workers, not yet familiar with the locations of their offices and desks, having moved into a new office building less than two months ago, are informed that in three months they will move to another, even more stylish new building. Along the broad straight roads, vendors new to the park are busy with construction, and rumbling cement trucks line up neatly awaiting their turn to unload. At the other end of the road, a biotechnology company is holding a product launch event. In the park the only constant is change, and here, any breakthrough seems almost a matter of course.
World-leading chip fab Taiwan Semiconductor Manufacturing Company has established itself in the Southern Taiwan Science Park. The gleaming silicon wafers that run through TSMC's production lines 24 hours a day symbolize the park's bountiful energy.
Successful recruitment
At the end of last year, the access road into the park was opened to traffic. This road, which cost NT$1.1 billion and took two-and-a-half years to complete, traverses the park, linking it with the enormous elevated access roads to the Sun Yat-sen Freeway and the Southern Second Freeway. Not only does the road connect the park to the Tainan urban area, but it enables more convenient transport of goods and passengers heading north or south.
"Vendor recruitment and daily operations are going smoothly, and we are now getting ready for the next phase, bringing major globally known vendors in and building the park into a world-class international industrial park," says Tai Chein, director-general of the STSP Administration. During the initial stages of its development, 2020 was forecast as the year the number of the park's tenants would finally reach 300. But judging by the current situation, with each year seeing 20 or 30 new vendors moving in, the goal of 300 vendors will be reached in just ten more years. And the total value of the goods produced by the park's vendors is expected to surpass the NT$1 trillion mark in five years.
"The rapid development of the park is not surprising, given that while the economy was depressed, we were making preparations for its recovery," says Tai Chein. As the optoelectronics and IC industries develop vigorously, and vendors are competing to lease land for expanded production facilities, the park has already leased 224 of the 268 hectares of industrial-use land set aside for the first phase of its development, achieving an occupancy rate of 84%. The 200 hectares of industrial land targeted for the second phase has already been completely leased out to optoelectronics vendors.
The LCD panels for large-screen televisions produced by Chi Mei Optoelectronics provide benefits such as extra-wide viewing angles and high color saturation, winning an extremely favorable response in the marketplace.
Industry aggregation
First-time visitors to the park might well be most eager to see for themselves such celebrated pillars of Taiwan's new-economy miracle as Taiwan Semiconductor Manufacturing Company (TSMC), United Microelectronics, Chi Mei Optoelectronics, and Hannstar Display. However, investors and business owners familiar with the industry are more interested in the industry aggregation that the park facilitates.
"Industry aggregation is not only an important indicator of an industry's depth, but also both signals and ensures international competitiveness," says Tai Chein. A technology park needs only a few large companies with annual production values in the tens of billions of NT dollars for it to act as a magnet, drawing in upstream and downstream vendors as well as satellite industries. Not only does such a situation provide companies with the most direct and most convenient services, but it also reduces production and shipping costs and risks, creating a cumulative benefit for the entire industry and increasing international competitiveness. To put it another way, industrial competition is no longer played out by giants pitted against each other. We have now entered an era in which an aggregate of teams engage in "co-opetitive" relationships that are simultaneously competitive and cooperative. As the industry aggregation effect gathers pace, this allows many local industries to transform and upgrade themselves.
For example, E-Sun Precision Industrial Co., originally a precision engineering company, responded to the rise of the domestic silicon wafer industry by making investments to turn itself into a manufacturer of silicon wafer containers. At the same time, it developed rinsing equipment and autoclaves for use during the TFT-LCD production process. Another company, Eternal Chemical, began supplying the IC industry with abrasive slurry for use in semiconductor production. Many other local companies, particularly in the well-established precision engineering industry located in southern Taiwan, spurred by advanced technologies, R&D capabilities, and the collaboration between industry and academia that the establishment of the park in this area has brought, are eager to participate in this industry of the future. And such moves are very much in keeping with the government's policy of "making local industries high-tech, and high-tech industries local."
Currently, besides the aggregation of first-tier semiconductor companies such as TSMC and United Microelectronics, the park has developed an optoelectronics zone that exceeds anything in northern Taiwan's Hsinchu Science Park, and the scale of which makes it the biggest in the world. Over the next two or three years, it is anticipated that as large optoelectronics vendors such as Chi Mei Optoelectronic and Hannstar Display continue to expand production facilities, LCD panel development will reach a peak. This will likely put Taiwan on the path towards having another globally number-one-ranking industry. In response to the continual expansion of optoelectronics factories and the need for links to satellite industries, the STSP Administration has already begun working with the Ministry of Economic Affairs' Industrial Development Bureau and the Tainan County Government to develop specialized industrial land in the areas surrounding the park, and construct an LCD TV zone.
"US and European governments have already announced that in two years, they will convert their television broadcast systems entirely to digital technology. China has also declared that in ten years it will go digital. Light, thin, high-definition LCD TVs can be placed almost anywhere to suit various types of room arrangements, allowing a family to have several without feeling cramped. It's easy to imagine that when the time comes, demand will be quite incredible," says the park administration's investment director Magnolia Hsin.
Besides requiring supplies of the crucial TFT-LCD panels, the LCD TV industry also requires links to downstream hardware assembly and distribution companies, and needs to be part of a global logistics system, if it wants to move product quickly to US and European markets. Though these downstream satellite industries are not high-technology industries and therefore do not qualify as STSP tenants, the establishment of the LCD TV zone should encourage these industries to aggregate. The hope is that optoelectronics will follow the semiconductor industry in becoming the second new trillion-NT-dollar industry in Taiwan's "two trillion + two star" policy initiative.
Hannstar Display, a major LCD panel vendor that claims to "provide the next-generation visual experience" and Chi Mei Optoelectronics, one of the STSP's premier corporate residents, have joined forces to create within the park the world's leading optoelectronics industry aggregation.
Biotech picks up steam
Besides information technology, Chiayi and Tainan Counties have been an important region for agriculture. Formerly sugarcane fields, the land where the park now stands boasts a number of biotechnology resources and technology centers. It is near a number of universities, such as National Cheng Kung University (NCKU), National Sun Yat-sen University and National Chung Cheng University (NCCU), as well the Asian Vegetable Research and Development Center, which has preserved a number of native vegetables. In addition, the Council of Agriculture's Taiwan Livestock Research Institute, with its comprehensive database of animal species, is not far away, and has linked up with the Academia Sinica's Center for Biotechnology and the second National Laboratory Animal Center, the Fisheries Research Institute, the Agricultural Research and Extension Station, President Enterprises' Central R&D Institute, and the Taiwan Sugar Research Institute to form an aggregation of basic and applied biotechnology research centers.
"Not being willing to waste these existing assets, we were determined to allow biotechnology concerns to aggregate in the park," says Tai Chein, who was formerly dean of the Center for Bioscience and Technology at NCKU. He places great importance on biotechnology development at the park. However, he also understands that this emerging Taiwanese industry, which was begun from scratch and carries very high risks, can only attract vendors to the park if the government provides investment and infrastructure initiatives.
The parts of the park under the elevated tracks for Taiwan's high-speed rail are in fact not suited for hosting precision high-tech industries such as semiconductors and optoelectronics, due to the vibration problem. However, such areas are very appropriate for biotechnology. Therefore, the park administration will set aside 45 hectares of land adjacent to the rail line as a "biotechnology corridor," with an additional eight hectares serving as a "biotechnology core zone," and will construct plants compliant with the cGPM standard, and a national animal laboratory.
STSP is more than just a science park-it is also an important archaeological site. Since 1995, the Academia Sinica Institute of History and Philology have uncovered 15 areas of ruins, and have established an archaeological museum to protect these important relics.
R&D park
"From the standpoint of serving vendors, we realize the importance of an R&D center to the sustained development of the industry, so in the initial planning stages, we decided to bring in a number of national research organizations," says Director-General Tai. The Industrial Technology Research Institute (ITRI), the first such organization to set up operations in the park, has already successfully played the role of facilitator for industry collaboration. The National Center for High-Performance Computing, the Chip Implementation Center, the National Nano-Device Laboratories, and the Center for Biotechnology have subsequently established operations as well, not only forming a concentration of laboratories, but also inspiring NCKU and NCCU to establish R&D centers in the park. Through an integration of resources from industry, government, academia, and research organizations, they are jointly molding the park into "Taiwan's new Silicon Valley."
In order to create an R&D park, the park administration provided the best terms to attract participation from various quarters. The results were quite favorable, as shown by the National Center for High-Performance Computing, which is the R&D arm of the National Applied Research Laboratories at the Southern Taiwan Science Park. The center provides the massive computing power required by the high-tech industry to accelerate vendors' production processes. Yu Hsien-cheng, deputy director of the center, gives a past collaborative project as an example: the re-engineered Eternal Chemical hoped to quickly reduce the time needed to adjust the hue of color pastes used for LCD filters. The center assigned three PhDs to use computer simulations to analyze and research the chromatic characteristics of color pastes, the effects of varying coating thicknesses, and the optimum values for mixing. They took only four months to complete development of a predictive simulation system.
The Southern Taiwan Science Park can draw on the long-standing agricultural industry of the Chiayi and Tainan plain, livestock technologies, and an eight-hectare biotechnology core zone to lay the ground for a biotechnology industry aggregation.
Stimulating innovation
Besides the introduction of large national research organizations to assist vendors in performing advanced technology R&D, the park has not neglected the cultivation of new startups. In November of last year, the Ministry of Economic Affairs' Small and Medium Enterprise Administration (SMEA) directed the establishment of the park's Incubator Center. This was done to aid local companies in seeking to transform their business or achieve a breakthrough.
"Many smaller companies wish to set up in the park, but unfortunately, they do not qualify, and require specialized assistance and guidance," says Wu Chung-jen, manager at the Incubator Center. Currently, seven smaller companies are resident at the center.
"We are providing guidance in all the fields related to the park's focus industries-electronics, information technology, communications, biotechnology, and precision engineering," says Wu. The Incubator Center brings together the SMEA and operational teams from NCCU, adding specialists from the ITRI and various national laboratories located in the park. Also participating are lawyers, accountants, securities firms, venture capital firms, and other service organizations to provide comprehensive assistance.
Park 17 is currently the STSP's only shopping mall. In order to enhance the living environment and help the park appeal to foreigners, several larger shopping complexes are planned.
A Global Vision-Southern Taiwan's Science Park Goes International
At the beginning of this year, a dozen or so Japa- nese women and their children took a trip to Hsingta Harbor in Kaohsiung County. They watched, fascinated, as local fishermen unloaded freshly caught fish from their boats and took them to the bustling marketplace nearby. Then they got to watch the pickling and sun-drying of mullet roe-and even got the chance to try some for themselves. Thanks to this "country life" tour, these newcomers got more than just a chance to sample Taiwan's unique fish markets-they were able to start to feel more part of this strange new country they now live in.
These women and children are the families of Japanese staff from the Southern Taiwan Science Park. With assistance from the park administration and under the leadership of Dr. Liu Juei-chen, wife of the park's administrative chief, they were able to take that tour as the first activity of the "Japanese Spouses' Fellowship." In future, the fellowship will hold regular events, including study groups, family visits, tours of famous landmarks, and outdoor activities. All of these activities are aimed at helping these families come to grips with the STSP and its environs.
"At the moment we've got over 100 Japanese technologists working in the park, many of whom are in upper management positions. On top of that there's another three or four hundred employees doing maintenance or tech support. It's their first time in Taiwan for many of these staffers, and having their families here with them will undoubtedly cause some clashes of culture, lifestyle, and custom," says Wu Meng-fen, deputy director-general of the STSP Administration.
For the administration, providing staff with a supportive environment is the primary concern. To that end, this January they set up a study group for the families of Japanese staffers; they chose Japanese over American or European staff because those groups are the minority of employees. Then in March they formed the STSIP Japanese Business and Social Exchange Group, with Kazuyoshi Osako, CEO of SC-IK Technology, appointed society chairman. Every month since, the Japanese staff working at the park have been able to get information on various leisure activities, exchange knowledge and experience from their respective professional fields, and take part in trips to famous historical landmarks.
"Currently there are 11 foreign firms in the park, and the number is still growing. In about 15 years' time, we predict that over 30% of the firms here will be foreign ones," says Tai Chein, director-general of the STSP Administration. The park has always aimed to bring together various businesses from around the world, but until recently they haven't had much of a reputation on the global scene. While their various recreational and service projects were still under development, it seemed almost impossible to attract foreign companies. Now that those facilities are gradually coming together, STSP is starting to make a name for itself. To make the most of these growing opportunities to bring in foreign clients, in January 2004 the STSP Administration set up a foreign business liaison group to help foreign clients take advantage of the services provided without the problem of the language barrier. They have also got help from companies already set up in the park in bringing in new overseas companies; for example, Chi Mei Optoelectronics has recruited nine Japanese firms. The liaison group specializes in helping foreign businesses in the park with finding investors and strengthening their employee support systems.
The SME Incubator leads the Southern Taiwan Science Park's mission to aid innovation-oriented vendors in joining the Park. It is hoped that the boundless creative energy of the young will invigorate the park.
Going global
"To attract the cream of the international crop of technologists to the park, we're building an 'international quarter': apartment blocks which will boast comprehensive services, and their own outdoor exercise area. This will help provide a strong, healthy, and comfortable lifestyle for foreign employees and their families," says Tai. The STSP Administration has put aside three hectares for this project. Also, in 18 months the park's first five-star business hotel is scheduled to open, offering international businesspeople a top-class place to stay. The park administration has also allotted a two-hectare area to an integrated commercial, residential, and school zone, which will be a completely self-contained, self-sufficient unit. All of this is projected to be completed in three years.
In addition to all this, the park has devoted space to recreational facilities like parks, nature areas, and scenic lake areas. This May they broke ground on a seven-hectare sports area, including softball, tennis, basketball, and croquet facilities, along with a children's playground, saunas, and spa baths. Construction is scheduled to take one year. To make the most of this wonderful recreational facility, regular shuttle buses will also run throughout the park.
To provide for the education of the children of foreign businesspeople who move to the STSP, four years ago the STSP established Nanke Elementary School. The school takes in both foreign students and children from nearby villages, has a bilingual stream, and offers a curriculum based on the American system, in hopes that all the school-age children in its catchment area will be able to find something to suit them educationally. Nanke Junior High opened last year, with a curriculum structure that follows on from that of the elementary school, providing children with a consistent system across the full nine years the two schools cover.
"We haven't set up a Japanese school yet," says Deputy Director-General Wu, "but that's part of our plans for the future." Chi Mei Optoelectronics has close ties with Japanese industry, and its CFO, Jack Lin, makes the point that "since we invited these people into the country, we should provide them with a comfortable living environment." Meeting this requirement is a matter of particular urgency, since the numbers of Japanese workers and families at the park look set to grow rapidly in the next few years.
Chi Mei had originally planned to set up a "Japanese quarter" and Japanese school two years ago, and then move on to the rest of their foreign contingent, expanding the area into an "international quarter" and broadening the school's focus to the whole international community. They discovered, though, that the legal issues surrounding the expansion would cause more problems than could be solved by just one company. Despite this, their plans for a Japanese quarter still stand, and they're excited by the prospect of getting assistance in this from the park administration. They hope to see their plan come to fruition in the near future.
"If we're going to keep heading down the path of globalization, we need not just to meet the recreational and lifestyle requirements of staff, but the requirements of international business as well," notes Wu. The administration is currently working on plans for a three-story international exhibition center. As well as hosting 300 booths for commercial exhibitions, the center will be home to ten financial institutions and an international conference hall, providing facilities similar to those of Taipei's World Trade Center.
"Southern Taiwan lacks a large-scale world-class exhibition center, so this will bring the area to the attention of industry and spur on trade prospects, along with raising the standard of local industry," says Tai Chein. But he is also well aware that once the facilities are complete, they'll face the problem of how to attract top-level events to those facilities. That will be the pivotal factor in the fortunes of the Southern Taiwan Science Park. (tr. by Geof Aberhart)
Don't be fooled into thinking the Southern Taiwan Science Park is only about cold, impersonal technology. The melding of business and the arts can be seen throughout the Park.
Chi Mei-Global Leader in Optoelectronics
At the end of 1990, when the Chi Mei group unveiled plans to expand from traditional chemical engineering into the then-uncharted territory of optoelectronics, very few people thought this was a smart move. Now, though, Chi Mei Optoelectronics is performing breathtakingly well on the stock market, and no-one takes this humble little local company so lightly any more.
"Chi Mei Optoelectronics was established less than six years ago, so we're still a relatively young company," says CFO Jack Lin. And Hsu Wen-lung, who recently retired as group chairman, has described the group's decision back in 1990 as having a definite aura of "we'll cross that bridge when we come to it" about it.
As they say, "the north has Formosa Plastics, the south has Chi Mei," and when the company, established 45 years ago in Tainan as Chi Mei Industries, set up Chi Mei Optoelectronics (CMO), there was never any doubt as to where the new company would call home-the "Silicon Valley on the sugarcane fields," Southern Taiwan Science Park. As such, they became one of the founding figures of the park, and provided a nucleus for the park to develop around.
In the years since then, business has been booming for CMO. They have continually expanded their land holdings and factory space and are currently constructing their number four TFT-LCD plant-a 5.5 generation LCD fab-with plans for a seventh-generation plant to follow.
"The company's growth has been extremely rapid, which has led to a big problem-a worrying shortage of skilled labor in the area," says Lin. Training skilled labor is something that shouldn't be rushed-all the company can do is offer intensive training courses for new employees and get them out on the front line. But in order to prepare a reserve of skilled labor for the future, they are currently working with National Chiao Tung University and National Cheng Kung University, in hopes that the science and engineering departments of these two universities will set up satellite campuses at the STSP soon, and provide a reservoir of skilled employees for the optoelectronics industry in the future.
"The prospects for development in this industry hinge on successfully bringing together the various aspects of production," notes Lin. When CMO realized that LCD TVs were looking like the next big thing for the industry, they went on to bring in upstream components suppliers from Japan to STSP, along with downstream manufacturers. Thus they were able to increase production speed and minimize costs incurred by shipping components.
"The South Korean government has also tackled the same issue, and is currently planning two to three hundred hectares of LCD screen manufacturing and assembly facilities," Lin points out. If one wants to profit from the market, one has to get in early. To this end, CMO had sought to bring a major TV maker from Japan to the park, but due to the slow-to-act nature of Japanese companies, in the end nothing came of it. Instead they turned to the vibrant local consumer electronics industry, and three or four of those companies have already set up shop at the park in a scramble to get in ahead of the game.
"We need to have all aspects of LCD TV production integrated in Taiwan, then we can start making some advances," says Lin. Now that the technology for notebook computer production, with its razor-thin profit margins, is fully mature and is moving offshore to mainland China, the company has the chance to expand again. But, although things are looking up for them, if they try and expand too quickly on the mainland, problems with logistics and the need to familiarize workers with new production technologies will rear their heads.
At present CMO holds a total of 121 hectares of factory space, both inside and outside STSP, and are now hoping to stake their claim as the number one producer of LCD units in the world. To achieve this, they are working closely and actively with fellow businesses in the Japanese industry, and particularly Japanese and Korean producers of flat-screen LCD monitors. These companies had a relatively early start in the industry and have done well in the third and fourth generation LCD markets, but the top positions in the fifth, sixth, and seventh generation markets are still up for grabs, with the eventual winners nigh impossible to predict. So if they can get access to cutting-edge technology from Japan and combine this with their hard work and high production speed, CMO could be able to gain a foothold in this new section of the market. And with their continuing success as the leader in their field at STSP, they also serve as a herald of the incredible potential of and prospects for the Southern Taiwan Science Park.(tr. by Geof Aberhart)
Southern Taiwan Science Park--Fact File
The Taiwan Semiconductor Experience
Taiwan Semiconductor Manufacturing Company (TSMC) has risen rapidly through the ranks of the global silicon chip fabrication industry, and their facilities at the Southern Taiwan Science Park are proving a must-see for anyone visiting the park. Currently making an annual turnover of US$5.9 billion and ranked ninth in the global semiconductor industry, TSMC is always looking for ways to extend their reach. After the STSP was established ten years ago, TSMC leapt at the opportunity and secured factory space roughly equivalent to six soccer fields, providing a centralized location for all their 12-inch silicon wafer facilities. Currently they have 14 workshops in operation, with space set aside for building several more. The speed and scope of TSMC's growth is truly astonishing.
Thanks to the performance of TSMC at the park, even the world's premier semiconductor manufacturing company, Applied Materials Taiwan, has seen fit to set up a facility there. Although the semiconductor fabrication facilities at STSP still aren't as comprehensive as those at the Hsinchu Science Park, a number of local companies have nonetheless established presences there. This demonstrates the amazing flexibility and vitality of small and medium enterprises here, and gives a good illustration of the drawing power of TSMC's reputation.
"The growth of STSP has spurred on the economy in the local area," says Ben Liu, project manager for TSMC's Public Relations Department. Liu was born and raised in the north of Taiwan and was totally unfamiliar with how the south had grown, until his relocation to STSP six years ago. After shifting down to Tainan, though, he found the place was coming on in leaps and bounds, and it was totally different to what he'd expected. It even turned out to be a more comfortable place to live than the congested north!
"The south may have been late to start developing, but their plans have been much more comprehensive," says Liu. Although STSP seems miles from Tainan proper and things aren't nearly as convenient as up in Taipei, the park has other things going for it. The traffic is much better, for one-it only takes about 30 minutes to drive from Tainan to the park. And TSMC has endeavored to meet any and all lifestyle requirements their employees may have, setting up convenience stores, bookshops, and restaurants, all in the company facilities. The company dormitory, which is home to more than 600 employees, is almost like a holiday resort-there's a football field, a gym, a beauty salon, and karaoke. They even provide a 24-hour security service. A second dormitory is under construction, so that even more employees can enjoy these facilities.
"The speed of TSMC's growth in the park is in large part thanks to the help and co-operation of the STSP Administration and the government," says Liu. Groups of businesses in the same industry regularly meet with the park administration, bringing up any requirements they may have, and the park always seeks to get back to them on those issues as soon as possible. In high-tech industry, where seconds can make the difference between success and failure and swift responses to changes in the market are vital, companies couldn't wish for better.
"The only problem with setting up facilities in the south is that skilled labor is hard to find, since for years now engineering students and others in high-tech fields have been heading north. It's difficult to turn something like that around in such a short time," laments Liu. He hopes that as people come to realize and appreciate the STSP, Taiwan's high-tech industry will reach a balance between north and south.
(tr. by Geof Aberhart)
The STSP's dormitories are nearly full already, and faced with rapid increases in the number of companies and workers in the park, building new residential facilities is an urgent matter. The photograph shows the residential area for the park's executives.
In the future, many of the park's living facilities will utilize the BOT (build-operate-transfer) approach to ensure their quality.
The number of people working within the STSP is increasing each year, contributing to the prosperity of the surrounding cities and towns. With its bilingual education and excellent teaching staff, Nanke Elementary School is seeing enrollments rise. It anticipates that a second elementary school will need to be established in seven years.
Hannstar Display, a major LCD panel vendor that claims to "provide the next-generation visual experience" and Chi Mei Optoelectronics, one of the STSP's premier corporate residents, have joined forces to create within the park the world's leading optoelectronics industry aggregation.
The National Center for High-Performance Computing maintains Taiwan's only supercomputer, which ranks #132 in the world for computing power and is a critical "member" of the STSP's service team.
Southern Taiwan Science Park--Fact File
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