Naomi: Case Overview

In the 1960s, the Taiwanese government identified the semiconductor

industry as the most strategically important of the high-tech industries for the
focus of development.
Starting with a few downstream assembly plants in this period (1960s), the
industry has since developed into a comprehensive industrial system that
demonstrates both vertical and horizontal divisions of labour.
The development of the industry can be traced through 5 primary stages,
characterized by certain processes:
o Initiation stage foreign-capital based assembly
Emergent role of universities as part of the NIS in supporting
the industry.
Overall, there was a focus on labor-intensive downstream
assembly due to low labour costs which attracted foreign
capital. Consequently, that brought in technology for IC
packaging, testing and quality control.
o Burgeoning Stage manufacturing technology transfer
Government labs (Electronics Research and Service
Organisation ERSO) led this process, by brining in process
technologies through government-sponsored research units,
and assistance from foreign experts.
Aim: to build industry from scratch
o Diffusion Stage growth of local plants
Government continued to support development of
semiconductors, in order to support local companies.
Mature technologies were transferred from government labs
into the private sector through spin-off companies
Therefore, this stimulated private investment in related
industries to build a complete system of sub-industries
hence, the vertical division of labour.
o Growth Stage industrial system expansion
Stage of industrial growth that was supported by strategic
alliances between domestic research institutes and foreign
leaders to maintain momentum of development
Government role was reduced
o Transformation stage upgrading by industrial cooperation
Marked by withdrawal of government involvement
Research institutes move from being providers of assistance to
experienced partners,
And the industry looks at establishing collaborative networks
and research consortia.
As the table from the case demonstrates, we can follow Taiwans progression
through these stages, from zero industrial technology capability, through to
catching up in the transformation stage.
And as this has occurred, the role of the government has decreased, while
the role of industrial players has increased.