FROM EDN EUROPE: Postcard from Taipei

A few weeks from now, a company called Kinpo Electronics will for the first time introduce a high-specification cell phone under its own brand name. The significance? Kinpo is a Taiwanese company that, until now, has largely focused—as has so much of the electronics industry in Taiwan, that now accounts for about half the country's turnover—on OEM manufacture of products that carry someone else's name. Classically, contractors in that situation act carefully and are always wary of placing themselves in competition with their customers; increasing confidence on the part of Kinpo seems to be a symptom of setting that caution aside and promoting its own name. We may not see the brand here in Europe, although you might at one time have said the same for fellow-Taiwanese company BenQ prior to its acquisition of Siemens' handset business. But as we know, the real high-growth markets for cell phones are no longer located in Europe.

The phone itself is, as you might expect, a full-featured 2.5-G design that runs Windows CE. The second version of the handset to be released will integrate a WiFi connection. Employing a Freescale 266-MHz processor, it has, according to a company spokesman, sufficient application resources to run Skype, potentially making it one of the first phones in the market that will force the service providers to face the issue of how they handle a world in which the consumer has a choice of infrastructures accessible from the handset. Later in 2006 the company will move on to an integrated GPS model, and a 3-G HSDPA variant.

The event is a trade show in Taiwan, called Taitronics. A trade show in a very literal sense—the immediate impact on the western visitor is of the country's fervent, infectious enthusiasm to do just that: trade. In certain respects, the contrast with a European exhibition is striking. Cruise the aisles of an event such as Electronica, and if someone accosts you as you pass his booth, it's likely that he will show you his latest product, or latest component technology. In the same situation, the vendor from Taiwan says, "What can I build for you? How many million pieces?" Taiwan is noted (for example) as a centre for the production of LCDs, mostly in small-to-medium sizes for handsets and portable products—manufacture of the largest screen sizes for the flat-panel TV business having concentrated in Japan and Korea. The Taitronics booths of companies such as Wintek, and many others, were festooned with TFT (and lower-cost technology) panels of all configurations and sizes. Again, their vendors don't see themselves as exhibiting a product range; rather they are displaying a capability. Not "I have a new product with a 4-cm screen size", but "I can build anything you like with a screen size of around 4 cm—what would you like?"

That attitude is repeated across a host of vendors of components and subsystems. The show takes place, almost literally, in the shadow of the building in the illustration; the Taipei 101 tower is a recently-constructed structure that is one of Asia's—and the World's—tallest buildings. The symbolism built into the architecture is all about bringing luck, money and prosperity, which confirms the predominant local ethic. Much of the Taitronics event is given over to local manufacturers of finished products, that will appear in our markets suitably adapted and branded.

The country is also home to the company that invented the concept of the silicon foundry, TSMC, an operation that exemplifies the out-sourced "whatever you need, we can build it for you" ethos. TSMC now accounts for nearly half of the world-wide silicon foundry output.

Other signs that the country is looking to build outwards from its core strategy come from an increasing focus on research programmes and applications-level projects. The country is strongly promoting IP telephony—and IP television—with a government-backed venture that aims to get VoIP running on mobiles (back to the Kinpo phone again) that involves 15 areas across 10 cities, using WiMax as the IP access. A government minister (how often have you seen a Western trade show opened by a government minister, let alone one who demonstrates a respectable level of understanding of concepts such as VoIP?) expressed the intention of promoting the programme worldwide.

All signs that, if you have come to view Taiwan predominately as a world-class contract manufacturing operation (which it undoubtedly is), that view is already out of date as the country rapidly broadens its base in the industry. As a country widely provisioned with GSM, its early experience with mobile IP services could be a very useful pointer to how our own markets might develop.