Michael Kramer
TAIPEI: Intel Corp CEO Craig Barrett urged Taiwan on Monday to move up the
information technology production chain to research and design and leave
low-cost manufacturing to rival China.
"Taiwan is undergoing a transformation similar to that which happened in
the United States about a decade ago, which is that manufacturing is tending to
move to areas of lower cost - mainland China, for example," said Barrett,
head of the world's leading chipmaker.
"There are some things that it makes sense to worry about, and there are
other things that it makes sense to recognise that they are happening and then
to move forward," Barrett told a news conference in Taipei. Taiwan firms
were the world's third largest manufacturers of information technology products
last year, but many local firms have moved production lines to China to tap its
huge market and low land and labour costs.
Acer Inc, Taiwan's largest personal computer maker, is among the firms that
have pinned their hopes on China's consumers. "The China resources and
market should be part of our advantage," Acer chairman Stan Shih told a
panel discussion with Barrett and Chunghwa Telecom chairman Mao Chih-kuo.
Government officials, however, have viewed the trend with alarm. Earlier this
month, Vice President Annette Lu blamed the island's economic slowdown on
China's "cash magnet", and urged the business community to keep its
money in Taiwan.
Wary of economic dependence on China, Taiwan forbids China investments in
strategic areas such as infrastructure and high-end semiconductors, and
maintains a US$50 million cap on a single project. Beijing considers
self-governing Taiwan a breakaway province that must eventually be reunified, by
force if necessary.
Barrett said Taiwan companies, which provide components, designs and contract
manufacturing for global customers such as Dell, Compaq and Ericsson, already
had a strong base for moving up from a manufacturing role. "You have
already succeeded, you have strengths to build upon, and you need to recognise
you can build upon that strength rather than trying to protect what you already
have," he said.
He said Taiwan was in the process of becoming "a country that will build
off of that base and move up the value chain towards the creation and design of
new components, new standards, new research and development".
(C) Reuters Limited 2001.