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Emerging Technology Report #22: September 6, 2002

Taiwan's Two Trillion, Twin Star (T3S) Plan

Global Emerging Technology Institute

Taiwan has grown into the world's manufacturing hub for electronics and IT equipment in the 1990s. Taiwan became the fourth largest producer of semiconductors in the world and the second largest in TFT (thin-film transistor) LCD production in 2001. Now the Executive Yuan has launched the "Two Trillion, Twin Star (T3S)" Plan in an attempt to develop its high-tech sectors even further.

The "Two Trillion" is a slogan to grow Taiwan's semiconductor and display sectors to NT$1 trillion (US$30B) industries in the near future. Taiwan's semiconductor production totaled NT$527 billion (US$15.6B) in 2001. The plan calls for expanding its chip production to NT$1.59 trillion (US$46.8B) by 2006, rendering Taiwan into the central player in the global semiconductor industry. Towards this goal, the Executive Yuan has implemented a variety of policy measures such as the national system-on-chip project. Taiwanese chip producers will intensively invest in 300mm-wafer facilities in the next few years. According to the data released by the Ministry of Economic Affairs (MOEA), major chip producers such as TSMC and UMC will invest nearly US$12B in total to expand 300mm-wafer production capacity by 2004. On the other hand, the "Two Trillion" plan calls for increasing Taiwan's display production from NT$290 billion (US$8.7B) in 2001 to NT$1.37 trillion (US$41B) in 2006. Taiwan is already the world's largest producer of LCD monitors and ranks second, after Korea, in TFT LCD panel production.

The "Twin Star" part of the plan is to promote the digital content and biotechnology industries into the next-generation drivers for economic development. In the digital content business, Taiwanese companies will develop unique software and digital content and localize foreign content (such as Japanese game software) into Chinese language in an attempt to grab the share of the rapidly growing content market in Chinese-speaking economies. The Executive Yuan will offer preferential tax breaks and investment treatments to assist the growth of the digital content sector in Taiwan. For the biotechnology to grow, Academia Sinica, the central scientific research institute, will play a key role in biomedical research and development and promote technology transfer. Plans currently under consideration include the establishment of the Taiwan Knowledge Industry Investment Fund of NT$100 billion (US$3B) (government 40%, industry 60%) to provide seed money to biotechnology start-up companies.

As Taiwan becomes technologically advanced and begins to need to develop intellectual property, it will become more important to forge international R&D cooperation alliances and recruit experienced researchers and engineers from abroad because the human resources with necessary skills are not enough in Taiwan. In fact, MOEA has recently held a forum in Tokyo to recruit Japanese professionals in semiconductors, TFT-LCD, biotechnology and digital content. As China looms as a fierce competitor in manufacturing of electronics and IT equipment, Taiwan must quickly enhance its industrial structure into a more knowledge-based, value-added one. Through varied schemes like the "T3S" Plan, Taiwan's government sector will continue to play a pivotal role in industrial policy and economic development.

Copyright © Japanese Institute of Global Communications