From TVs to Calculators: The Rise of Taiwan’s Technology Industry
The launch of domestic television broadcasting in 1962 catalyzed the next stage of growth for Taiwan’s electronics sector. This period saw the initiation of local production of monochrome TV sets for the domestic market, with technical support from Japanese giants like Matsushita, Sanyo, Sharp, Toshiba, Sony, and Mitsubishi through licensing agreements and joint ventures.
The allure of Taiwan’s low labor costs and government incentives soon attracted major U.S. multinationals to set up TV assembly operations, focusing solely on export. Philco led the way in 1965, followed by Admiral in 1966, RCA in 1967, Motorola in 1970, and Zenith in 1971. These companies were allowed to import components duty-free but had to export all finished products, allowing them to leverage Taiwan’s low assembly costs to compete against Japanese TV imports in the U.S. market.
Taiwan’s competitive advantage in TV assembly attracted other global brands including Hitachi and Orion from Japan, Philips from the Netherlands, and Grundig from Germany. These companies set up bonded factories in the early 1970s to export to both U.S. and European markets. By then, the island had become one of the world’s leading exporters of TV sets, shipping out 3.8 million monochrome sets in 1973 alone, as well as 373,000 units for local consumption.
The transition from monochrome to color TV production in the late 1960s was a natural progression, coinciding with the introduction of color broadcasting by state-owned stations in 1969. This mirrored the earlier expansion in monochrome TV manufacturing. Initially lagging behind the U.S. and Japan, Taiwan quickly caught up with Europe, where the UK, France, Germany, and Italy had just started color TV production. By 1978, domestic and foreign firms were producing over 1.3 million color TVs annually, predominantly for export.
The growth of Taiwan’s radio and TV industries was supported by a robust network of small and medium-sized firms specializing in component manufacturing. Although multinational corporations initially sparked the establishment of the components sector, it was the small and agile domestic firms that formed the industry’s backbone and drove its expansion. Their adaptability to market shifts and technology innovations enabled Taiwan to ramp up production swiftly and seize global market opportunities.
General Instruments kicked off electronics component manufacturing in Taiwan by setting up the island’s first bonded factory in suburban Taipei in 1964, focusing on transistors, tuners, and other essentials for export. Philco and RCA followed by expanding into component production before scaling up to TV assembly. Local firms capitalized on this foundation, producing cost-effective TVs for markets in Southeast Asia, the Middle East, and Latin America.
Taiwan’s thriving TV manufacturing industry provided the launchpad for the island’s leap into calculators in 1972, digital watches in 1975, and eventually personal computers. The expertise gained from manufacturing electronic components like PCBs (printed circuit boards), CRTs (cathode ray tubes) and switching power supplies proved invaluable for future PC and monitor production. The skilled workforce and established supply chains from the TV industry facilitated this transition. A notable example is San-Ai, which started as a calculator manufacturer through a collaboration between a textile firm’s capital and technicians from the electronic components industry. Two of its spin-offs, Inventec and Quanta, subsequently emerged as major players in the notebook market in the 1990s.
Despite the growing success of the island’s electronics industry, the Taiwan government was becoming increasingly concerned that much of it still consisted of low value electronics assembly operations. Recognizing the need to upgrade this key sector, which was already the island’s second largest export category, the government set the ambitious goal of creating a domestic semiconductor industry. Given that it possessed no IC technology itself, the government faced the huge challenge of figuring out how to achieve this objective.
