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Intel CEO urges Taiwan to work on research and design

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CIOL Bureau
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Michael Kramer

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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.

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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.

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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.

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