Page last updated at 11:50 GMT, Friday, 24 October 2008 12:50 UK

Taiwan takes on tech innovation

Microchip over cuircuit board
90% of the world's laptops are produced in Taiwan

Spencer Kelly visits Taiwan to see how the country's manufacturers are thriving in the global consumer electronics market.

Sitting just off China's east coast, Taiwan has long been overshadowed by its big brother in the manufacturing game.

While China is on its way to becoming the planet's biggest economy, Taiwan is considered the technological workshop of South East Asia.

Already 90% of the world's laptops are produced in Taiwan, along with vast quantities of electronics from motherboards to mobile phones.

But Taiwanese companies have started to realise the favourable commercial conditions offered by its neighbour.

Some have moved their manufacturing to China, where enormous quantities of goods can be produced at bargain basement prices.

"Thirty to forty years ago Taiwan was manufacturing for USA and Japanese companies," said Jonathan Tsang, the chairman of Asus. "But now because the living standard is already high, the manufacturing cannot compete with China, so the manufacturing has been moved to China."

Asus EcoBook in bamboo
Asus is testing out its EcoBook bamboo laptop on consumers

Acer spokesman Campbell Kan said its ability to design machines came from its knowledge of manufacturing.

"We start from the products then we start to build out channels worldwide," he said.

"I think Taiwanese companies have two approaches: one you go for the global manufacturing as a provider, the other or you go for the branded business," he explained.

Novel idea

However, to succeed in the ultra-competitive hi-tech space, some of Taiwan's tech manufacturers have created new markets, rather than simply emulating market-leading products.

Jeremy Huang, technology reporter at Taiwan's Commercial Times said for Taiwanese companies had to "focus on innovating and branding" to make a profit.

"Acer's founder Stan Shih raised the concept of the smile curve 20 years ago," said Mr Huang. "He said innovation, and marketing and branding, are at the two highest points of the curve making the most profit, but manufacturing is at the bottom of the curve. Taiwan is currently at the bottom of the curve."

The infrastructure and experience gained from years of hi-tech production is helping Taiwanese tech giants turn from bolting together components and devices for foreign companies to creating innovative products under their own banners.

Asus has experimented with design, while doing its bit for the environment, by making the case of one machine out of bamboo.

Jeremy Huang, technology reporter at Commercial Times
Jeremy Huang says Taiwan's tech firms must focus on "innovating"

Asus will produce 200 of its EcoBook bamboo laptop to test consumer reaction.

Taiwanese manufacturers have started carving out brands with global appeal by successfully tapping into the niche market for low-cost machines.

Asus is also due to release the EEE Top, an all-in-one touch PC, where the computer is built-in to the back of the screen.

Many Taiwanese hardware firms have also capitalise don the boom in the cheaper netbook laptops. Asus' Eee PC leads the pack but Acer has its One line, and US computing giant Dell has launched the Inspiron mini.

The demand started by the One Laptop Per Child programme has helped propel the small laptops into the mainstream.

With a manufacturing base already in place, the isle's products already permeate every part of the tech landscape

From chic netbooks to futuristic desktops, Taiwanese computer companies can start taking on Western and Japanese brands on their own terms.

This report will be broadcast in this week's edition of Click on Saturday 25 October at 1130 BST on the BBC News Channel.

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