From Rice Fields to Transistor Radios: The Birth of the Taiwan Electronics Industry

In the aftermath of the devastating Chinese Civil War, the exiled KMT (Kuomintang) government faced the daunting task of rebuilding Taiwan’s devastated economy after fleeing to the island following its defeat at the hands of the Chinese Communist Party.

With Taiwan’s fertile rice fields and sugarcane plantations largely under the control of a few powerful families, the government’s immediate focus was on boosting agricultural productivity through land redistribution to tenant farmers. While these agricultural reforms were underway, a number of fleet-footed local entrepreneurs noticed the growing popularity of imported radios and moved quickly to take advantage of this new market opportunity. In 1948, they began assembling radios using imported vacuum tubes and other components to meet rising domestic consumer demand and unwittingly set Taiwan on the road to becoming a global technology powerhouse.

Eager to foster job creation and address chronic foreign exchange shortages, the government swiftly enacted protective measures by instituting import licensing controls on radios in 1950. Despite the modest quality of the early products, domestic sales surged, transforming small assembly shops into large-scale factories to cater to this demand.

To reduce costs and improve manufacturing flexibility, companies started to produce less sophisticated components locally, laying the groundwork for a robust supply chain that would prove vital in enabling the future development of the island’s consumer electronics and high-tech industries.

Capitalizing on their experience with vacuum tube radios, Taiwan firms transitioned to manufacturing transistor radios once these new devices became popular in the U.S. during the late1950s. Following the establishment of the island’s first transistor radio plant in 1961, production volumes mushroomed to over one million units in 1965 driven initially by export orders from major Japanese trading firms attracted by the island’s low-cost yet skilled labor force.

By 1968, Taiwan was churning out over 3.5 million transistor radio units, mostly for export to the U.S. market, solidifying its position as global hub for electronics assembly and paving the way for the industry to enter its second stage of development with its foray into the emerging television market.