Taiwan's hi-tech firms remain hopeful

Computer sales have fallen sharply

By Michael Bristow in Taipei

A downturn in the world economy, the terrorist attacks on the US and a spate of typhoons have all damaged the Taiwan economy this year.

Government departments regularly release gloomy economic data. Unemployment has just hit a record of more than 5% and exports have declined by 20% this year compared to last.

We depend too much on electronics and that's why our economy has been hit harder than other economies by the world slump

Professor Cheng Cheng-mount

But many companies in the hi-tech sector - the motor of Taiwan's export-oriented economy - are far from downcast, believing they can withstand the storm.

Professor Cheng Cheng-mount, based at the Taiwan Institute of Economic Research, said many businesses remained competitive.

"We depend too much on electronics and that's why our economy has been hit harder than other economies by the world slump, but we haven't lost our confidence."

Long-run future

Professor Cheng also said he did not expect the terrorist attacks on the US to harm hi-tech firms, such as computer and semiconductor manufacturers, in the long term.

"The expected boom of the fourth quarter will not arrive, so this will effect the relative hopes of our companies."

Taiwan's economy has been robust

But he said a turnaround would come, though perhaps not until next spring.

Taiwan Semiconductor Manufacturing Company, the biggest such firm in the country, is equally upbeat about its long-term prospects.

Company sales are expected to fall to $3.5bn this year from $5.3bn last year as exports, which make up 70% of the firm's orders, have been hit by the world slump.

But a company spokesman said they were still optimistic about the long term future of the semiconductor industry.

"In the last 30 years annual growth has been 15%. We expect this to continue in the future," he said.

Relations with China

But the hi-tech sector will have to overcome both political and economic problems to maintain its past successes.

Taiwanese businesses have invested heavily in China, and the two economies look set to move even closer when both enter the World Trade Organisation in coming months, but relations between the two remain frosty.

China considers Taiwan a rebel province and has vowed to take it back by force if it drags its heels over reunification, and Taiwan currently limits investment on the mainland.

Eugene Hwing, of Taiwan computer hardware maker Acer, which has three factories in China, said this made the future uncertain and so planning was difficult.

Hi-tech firms also have to maintain their competitive edge if they are to keep ahead of rivals, particular from countries such as China.

Mr Hwang said there was currently over-supply in the PC market and companies like Acer had to focus on developing new products and services.

"If PC companies think they are going to produce only PC products then they will have problems. They will have to think about other business ideas and services," he said.

But if Taiwan's hi-tech firms can meet new challenges, Professor Cheng said they should have a bright future.

He said the sector could have "20 years of good business" before the next generation of industries come along.