Taiwan’s IT Sector Outperforming Korea’s

A leading Korean think tank said yesterday that Korean information technology firms need to stay far ahead of their Taiwanese competitors, who have rapidly grown as a threat.

Samsung Economic Research Institute in its report “Taiwan Has Emerged as an IT Powerhouse” said Taiwanese IT firms have grown dramatically from their beginnings as original equipment manufacturers that produced products at low prices.

“Now they manufacture more than 80 percent of the world’s major IT products,” the report said.

The think tank analyzed the financial performances of 3,351 global IT firms between 1997 and 2006 by nation.

Sales by Taiwanese IT firms jumped 12.6 times and their net profit jumped 5.5 times over the period, far exceeding the global averages of 200-percent growth and 270-percent rise in net profit.

Moreover, the Taiwanese firms saw sales grow 32.5 percent between 1997 and 2006, surpassing those of Korea (22.5 percent) and China (31.5 percent).

In line with the rapid growth, Taiwan’s share in global IT sales reached 10.5 percent, third behind those of the United States (31.5 percent) and Japan (30 percent) but higher than Korea’s (6.5 percent).

In addition, 13 Taiwanese firms are among the world’s 100 largest IT companies in sales, while Korea has only five.

The report said, “Taiwanese firms have successfully established a mass manufacturing system and secured cost competitiveness by making use of cheap labor in China. They have also reduced delivery time by breaking down manufacturing lines and dividing work along with competitors.”

“Taiwanese firms have added value by turning themselves into original design manufacturers who provide product design and overall manufacturing service, instead of just assembly and mass production.”

cha@donga.com