The Breakfast Meeting That Sparked Taiwan’s Silicon Revolution

By the mid-1970s, Taiwan had already established itself as a leading global hub for electronics manufacturing, though much of the industry 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 targeted the development of a domestic IC industry. In 1973, it funded the establishment of the Industrial Technology Research Institute (ITRI) to obtain, introduce, and transfer new technologies to domestic industry.

On February 7, 1974, a modest Taipei noodle shop became the unlikely birthplace of Taiwan’s semiconductor revolution. Minister of Economic Affairs Y.S. Sun convened a breakfast meeting that brought together key figures from Taiwan’s government, academic, and technology sectors to discuss the topic. Over steaming bowls of noodles, they charted a course to secure Taiwan’s economic future by developing a domestic semiconductor industry to complement its thriving electronics sector.

The impact of the meeting was immediate. W.Y. Pan, a Chinese American engineer formerly with RCA, isolated himself in a room at the Grand Hotel to draft a comprehensive proposal for an IC development project. This proposal led to a landmark agreement in 1976 between ITRI and the US conglomerate RCA, marking Taiwan’s entry into IC manufacturing.

In a 2011 interview for the Computer History Museum, Dr Robert Tsao, the founder of United Microelectronics Corporation (UMC), shed light on Taiwan’s strategic move into IC manufacturing. He emphasized that the initiative aimed not only to transfer the technology to Taiwan but also to deploy it in a demonstration factory to “prove the economic feasibility of mass production before the technology was finally transferred to private industry.”

Dr Tsao revealed that ITRI selected RCA from 14 potential partners because of its advanced seven-micron CMOS (Complementary Metal-Oxide-Semiconductor) technology, which was suitable for chips used in consumer electronics devices such as stereos that were already being manufactured in Taiwan because of its power saving qualities. Since CMOS was not the mainstream semiconductor manufacturing technology at the time, it also allowed Taiwan to enter the market discreetly, avoiding direct competition with established industry players.

RCA’s selection was also strategic. By the 1970s, under Robert Sarnoff’s leadership, the conglomerate had diversified into various businesses like Hertz, Banquet, Random House, and Gibson, diluting its focus on semiconductors. This shift made RCA more amenable to offering favorable terms to ITRI, including hands-on training for Taiwanese engineers in the US and comprehensive technology transfer without stringent restrictions.

The choice of ITRI to manage this technology transfer was crucial. Even though it received public funding, ITRI had a much wider and more flexible remit than a conventional government agency or research institution, extending beyond pure R&D to include technology commercialization and company creation. Its unique operating model gave ITRI room to make bold strategic investments in technology innovation to advance Taiwan’s industrialization that neither private enterprises nor government organizations were equipped to conduct.

With the technology it had licensed from RCA and a talented team of engineers trained in the nuances of how to deploy it, ITRI was now ready to create a proof of concept with the construction of a demonstration factory that would showcase Taiwan’s ability to enter the global semiconductor manufacturing race.