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Seeing Taiwan at center of new IC world

Posted: 16 Sep 2005 ?? ?Print Version ?Bookmark and Share

Keywords:ceo? nicky lu? taiwan? ic? manufacturing?

Lu: The semiconductor sector is still full of energy to grow.

In 1991, Nicky Lu left his job at IBM to return to Taiwan. He'd been treated well at the U.S. company and was a co-inventor of the advanced DRAM technology IBM was using at the time. But when Lu got a call from a former government minister in Taiwan to help build a fledgling IC industry there, the opportunity piqued his interest.

He was surprised by what he saw. Tiny as it is, Taiwan was quickly amassing a pool of talent that would soon project it into the heart of the semiconductor, PC and consumer electronics industries.

Lu moved quickly to establish a company, Etron Technology Inc., that would specialize in DRAM technology development and take the lead in transitioning Taiwan to 8-inch wafer technology.

Since then, he has founded two other companiesGlobal Unichip Corp. and iCreate Technologies Corp.and has become an active voice in Taiwan trade organizations. Lu seems perpetually upbeat, even about the long malaise that has dampened IC industry growth.

EE Times: You believe that the IC industry will go into another phase of high growth. Why is that?
Nicky Lu: Some people may feel that the semiconductor business hasn't been growing fast enough from 1999 until today. In my view, this is just a big transition that has been gradually happening and will take about 10 years, until about 2008. We know we are transitioning out of the PC era to an application-driven era or system-chip era, where other devices like HDTV, 3G cellular telephony, digital cameras and iPods will gradually rise and become a strong business.

The demand is coming from end-users and I'm confident it will generate new demand for ICs and especially for the value that ICs provide. So while most people think that ICs are getting saturated or mature, I think not. It took almost 20 years to transition from the mainframe to the PC era, during which the industry went through the 1985 downturn, the 1990 downturn and others before it boomed in 1994 and 1995. The semiconductor sector is still full of energy to grow.

So it may be higher volume, but IC makers will still have to be very efficient to keep prices low, especially for consumer electronics. Is that how you see it?
Right. And there will be other new applications. I attended a conference where people were talking about ambient intelligence. It generated a lot of new ideas. For example, people could wear shirts with sensors that would be health-monitoring systems. Imagine if a person wore a shirt that could monitor them in their sleep or during working hours; if anything went wrong, a signal could be sent to a health care worker. There can be many inventions that will generate IC growth and help ICs take prevalence in a person's life.

What is Taiwan's role in this new world? Will it be able to generate the kind of basic intellectual property that will help it get ahead?
Of course, IP is important. But in Taiwan, we want to generate more revenue by pushing our ICs into different applications. Plus, we need to generate more profit, which means more value-added. IP is a tool, not an end target. It's a tool to help people make a more profitable business. In that sense, Taiwan wants to generate more innovation and let the innovation become valuable IP and, then, a product. The end target is clear: Taiwan should change from being driven by manufacturing toward being driven by knowledge and manufacturing. We don't want to create a misunderstanding that Taiwan is being IP-driven and giving up its manufacturing. Taiwan's future will be a combination of both.

What sort of model should Taiwan create to enable this change?
In the past, Taiwan just made PCs. But the trend now is for Taiwan to link more seriously to the brainpower in the United States and use the manufacturing base in the Asia-Pacific to generate more value in products.

I see a pan-Pacific IC circle forming that replaces the pan-Atlantic circle, with the emphasis changing as more consumers emerge in Asia. Just look at the map. On the right is North America, and on the left are China and India. So Taiwan is in a good spot. More Taiwan companies are focusing on high-end applications in the United States and Japan. With a manufacturing base and good knowledge about the China market, they can make cost-effective products.

How do you see the relationship evolving among South Korea, Japan, Singapore and Taiwan? Do you see any big shifts happening?
Cooperation and competition are the best words to describe the relationship. Who will become the winner depends on which markets can fully take advantage of this collaboration in connecting IP with manufacturing. It's different than before.

As China rises, we see that for the sophisticated designs, it is behind. For the low end, like 4bit and 8bit controllers, China is doing OK. So we should fully understand their strengths and inadequacies. Of these four markets, whoever can recognize and use that understanding should increase their economic power. The talent in China in India cannot be ignored. It is migrating toward the high end.

What do you think about the restrictions Taiwan has on semiconductor investment in China?
If we look at it from a global perspective, you may conclude that Taiwan should be wide open and let the industry focus on how to collaborate with mainland China and how to compete with the mainland.

From the government perspective, however, there is concern. Engineering resources today are still very good in Taiwan. But we cannot ignore the human capital coming from mainland China and India, so we should learn how to keep the most leading-edge technology in Taiwan and find parts where we can afford to collaborate with China. That process is difficult to understand, especially when the politics is getting tense.

When you returned to Taiwan from IBM about 15 years ago, you were surprised by the engineering talent there. Do you think the same thing of mainland China's engineers when you visit there now?
Yes, engineering talent is catching up in China. But let me talk about Taiwan first. Why is Taiwan so good? It is because the engineers not only have good talent, but also have the entrepreneurial spirit. If you look at the individual employees of Etron, they are all entrepreneurs, in a way. They think about how their performance will affect the company's results. So if it does have an effect, then they will work a few more hours or maybe till two o'clock in the morning. That's how the majority think.

Mainland China's engineers are gradually picking up in that they are talented and smart. But the entrepreneurship is way behind.

People in certain areas want a basic salary, unlike in Taiwan, where they get salary based on a bonus because they worked harder for the company and helped it make more profit. That kind of cycle is not quickly emerging in China, so there are still gaps in the productivity.

What serious challenges does Taiwan's industry face?
We need more experienced engineers, aged 40 or above, who think that innovation and engineering work are the most beautiful thing in their lives. Here, engineers are pushed more toward the management level. We need to emphasize a dual-ladder system. Management makes a lot of contributions, such as planning, but it is not the core part.

Is there is a need to attract more foreign engineers to Taiwan?
The answer is yes. It's possible. The United States has proved that the more open and enjoyable a society is, the more likely it is that all the talent will go there. That's my "pool" theory. If you make your pool the cleanest and most beautiful, then people will come over. So as the living standard in Taiwan goes up, then more people will be interested in coming.

In my other company, Global Unichip, we have started using Indian designers and are evaluating how they live here, how happy they are and what sort of things we have to pay attention to in order to keep them there. The only difficult part is that Taiwan should put more emphasis on shaping its society so that it is bilingual, so that English-speaking people should feel happy to live there.

- Mike Clendenin
EE Times




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