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Talk of the Day -- Falling competitiveness leaves ICT sector reeling

2012/08/20 23:20:23

Taiwan's exports of information and communications technology (ICT) products posted a 23.3 percent annual decline in the first seven months of this year, according to customs statistics.

The sector's lackluster performance led to a 5.8 percent drop in the country's overall outbound shipments during the same period.

Slumping exports, coupled with slow private and government investments, has prompted the Directorate General of Budget, Accounting and Statistics to slash its estimate of the 2012 GDP growth to a dismal 1.66 percent last week.

Local economists and market analysts said the ICT industry's woes have cast cloud over the country's economic outlook.

They also attributed ICT sector's export decline mainly to its falling competitiveness.

The following are excerpts from the local media coverage of the local high-tech industry's plight:

China Times:

Taiwan has been endeavoring to expand its research and development fund to 3 percent of its GDP.

According to a study by the Central Bank of the Republic of China (CBC), Taiwan's R&D funding accounted for 2.78 of its GDP in 2008, lower than South Korea's 3.36 percent, but higher than Singapore's 2.68 percent and almost same as the United States' 2.79 percent.

In 2010, the ratio of Taiwan's R&D funding increased to 2.9 percent of its GDP.

However, Taiwan has traditionally incurred huge deficits in patent or technological trade.

CBC data shows that Taiwan generated US$838 million in patent and trademark royalties in 2011. On the other hand, it paid US$5.788 billion in royalties to foreign patent or trademark owners during the same period.

The figures indicated that Taiwan incurred nearly US$5 billion in technological trade deficit.

About 70 percent of Taiwan's R&D funds are contributed by private enterprises while the government earmarks about NT$90 billion in annual budget for R&D projects.

The deficit in patent trade signals that there is still ample room for Taiwan to improve its patent portfolio and technological innovation.

Industry insiders said Taiwan's high-tech industries such as DRAM, LCD panel, LED and photovoltaics sectors are all facing bottlenecks in development.

South Korean technology giant Samsung's rise has dealt a severe blow to local ICT makers, including smartphone vendor HTC Corp., industry analysts said.

The government needs to help local ICT makers integrate their resources to upgrade technological levels and survive ever fiercer global competition, they added. (Aug. 20, 2012).

Economic Daily News:

Stan Shih, iD Softcapital Group chairman and founder of Acer Inc., said Taiwan should not pump any more funds into DRAM and LCD panel industries and should instead invest more in industries with more sustainable development models.

He further said Acer and HTC should reinvent themselves to survive competition in the global market. (Aug. 20, 2012).

(By Sofia Wu)