Looking beyond the 'Made in Taiwan' label
Taiwan's computer makers are morphing from simple contract
manufacturers into designers and innovators as they fight
for survival in a competitive sector.
Four out of five new notebook computers are now designed on
the island, as firms making everything from cell phones to
PCs move from a "do what you're told" mentality to a "let's
innovate" one, transforming the "Made in Taiwan" label.
The change is partly driven by new business opportunities,
but also by sheer competition as companies try to set
themselves apart with their innovative design.
Some of the world's top electronics makers, from PC makers
Dell and Hewlett-Packard to cell phone makers Nokia and
Motorola, are looking to domestic behind-the-scenes players
with names like Quanta Computer and Asustek Computer to not
only make, but also design their latest gadgets.
Dell, the world's top PC maker, said that over 50 percent of
its notebook PCs are now designed in Taiwan by its locally
based team working closely with its manufacturing partners.
Dell, whose top Taiwan manufacturing partners include
Quanta, set up its design center in Taiwan in 2002 with 50
people for PC and notebook development.
Since then the facility has grown more than sixfold to 330
"We still plan to further expand our design team in Taiwan
as it is an important part of our business," said Shane
Cheng, Dell's regional director.
As competition in the fast-paced IT world intensifies,
Taiwanese firms are trying everything they can to give their
clients added-value services.
Taiwan computer makers such as Quanta, Asustek and Lite-On
Technology have all created their own design teams, earning
reputations as new product pioneers and winning awards in
"Over 80 percent of the world's notebook computer design is
outsourced to Taiwan now," said JP Morgan analyst Alvin
Having design teams close to the manufacturers has also
become more strategically logical for foreign tech firms,
said Kwock. Most final production is done nearby, in
Contract makers are using their design capability to
distinguish themselves from one another, realizing
sophisticated design capabilities can attract customers who
want everything from MP3 players to mobile phones and laptop
"At some point you can't compete on cost alone, so you have
to turn to design," said Markus Wierzoch, a product design
manager for Asustek.
The move to design marks a coming of age for Taiwan firms,
which have migrated from pure manufacturing work, or
original equipment manufacture (OEM), in the 1980s to a new
type of work, called original design manufacturing, or ODM,
starting in the 1990s.
As competition heats up,
the level of design services offered in Taiwan has increased
as well, as players try to distinguish themselves in
industries where margins are already razor-thin.
As a result, the island is earning a name for its new
generation of young engineers and designers who are winning
awards in global competitions for their work.
"Perceptions regarding Taiwan's design has really changed a
lot in the past five years or so," said Wierzoch.
While awards may be a pat on the back, the Taiwanese firms
are less motivated by prestige and payment than by sheer
Quanta, the world's largest notebook contract maker, whose
main clients include Dell and Hewlett-Packard, said its
design development services are provided almost free of
charge for big customers since competition is so intense.
"It is what Taiwan makers have to do to survive," said JP