Taiwan’s three Science-based Industrial Parks – the Hsinchu Science Park in northern Taiwan, Central Taiwan Science Park centered in Taichung, and Southern Taiwan Science Park centered in Tainan – have provided a nurturing base of operations for the country’s high-tech industries.
The advantages of locating within a science park include:
- One-stop Service. Companies need to deal only with the Science Park administration for all government-related topics, such as environmental, safety, labor, and tax issues.
- Strong industry clusters. The concentration of a critical mass of companies in the same industry helps build the value chain for that sector.
- Sound infrastructure. The science parks provide integrated infrastructure including water, gas, power supply, logistics, housing, and security to support the smooth operations of companies in the parks.
“Everything you need is right there: manufacturing, R&D facilities, and a strong talent pool from top universities,” says Hsu Yu-Chin, deputy minister at the Ministry of Science and Technology, the government agency responsible for overall administration of the science parks. The parks all partner with leading educational institutions to help ensure a steady supply of talent.
Administration of the parks by the central government is also an advantage, freeing the enterprises from much of the pressures that often stem from local-level politics in Taiwan. Due to the national prestige surrounding the science parks, they are also assured of getting priority attention if electrical power and water resources ever have to be rationed.
Stephen Su, vice president of the Industrial Technology Research Institute (ITRI) and head of its Industry, Science and Technology International Strategy Center, notes that space in the science parks is available for rent only. Companies in the parks therefore do not have to make huge expenditures to purchase land, and can make better use of money by investing it in R&D or capital equipment.
At Corning Display Technologies Taiwan, President Daniel Tseng credits the “holistic support from the Science Parks” as enabling “Corning to build two large LCD glass substrate facilities in Tainan and Taichung and grow with our customers in Taiwan.” He also expresses appreciation for the ease of “access to the Science Park administration office,” which serves as a bridge to the central government for any issues affecting operations.
A wide variety of tech hardware is produced in all three science park clusters, but each park has its own areas of specialty. The Hsinchu Science Park focuses on semiconductors and optoelectronics, the Central Taiwan Science Park on precision machinery and optoelectronics, and the Southern Taiwan Science Park on medical devices and green energy.
Hsinchu Science Park
The Hsinchu Science Park is the first and most influential of the science parks. It began humbly in December 1980, primarily as a hub for PC component production and assembly. Taiwan was then what Southeast Asia is today and China was until recently: a low-cost production center for multinational corporations.
“The Hsinchu Park’s revenue has steadily grown since the 1980s but there have been some big changes in terms of the key industries,” says Wayne Wang, director general of the park administration.
By the 1990s, the Hsinchu Science Park found its stride as a one-stop center for semiconductor production – from design to fabrication and packaging and testing. Semiconductors remain the paramount industry in the Hsinchu park, accounting for 73% of the annual aggregate revenue of NT$1 trillion, according to the Ministry of Science and Technology. The optoelectronics industry (particularly makers of liquid crystal display panels), which began setting up shop around 2000, form a second pillar.
The production of telecommunications equipment was common in Hsinchu in the 1980s through the early 1990s. Some remains today, but most has long since departed for China.
Optoelectronics peaked around 2008, when first Korean and then Chinese producers started chipping away at Taiwanese LCD panel makers’ market share.
Today, the Hsinchu Science Park is spread over six locations. Besides the main campus in Hsinchu, there are now branches in Zhunan and Tongluo in Miaoli County, Longtan in Taoyuan, Yilan County, and Hsinchu County’s Zhubei (designed a Biomedical Science Park). In all, it is home to more than 530 companies employing about 152,000 people.
More than 50 enterprises operating in the park originated as spinoffs from its partners in the education and research community – ITRI, National Tsing Hua University, and National Chiao Tung University.
To maintain its competitiveness, the Hsinchu Science Park is diversifying its focus, Wang says. In the future, it will increasingly seek to tap opportunities in a broad swath of high-end manufacturing segments, including advanced IC fabrication, internet of things (IoT) devices, and premium medical devices. Wang says he also expects the park to host companies in the artificial intelligence, precision medicine, and wireless broadband segments.
One of the most positive legacies of the Hsinchu Science Park is the wealth it has created in the surrounding community. ITRI’s Su notes that in 2017, the average disposable income of Hsinchu households was about NT$1.28 million, second only to Taipei City. Given the prevalence of high-skilled tech jobs in the Hsinchu Science Park, monthly salaries there are well above the national average: NT$65,000 compared to NT$38,000.
Central Taiwan Science Park
Founded in 2003 in Taichung to develop a high-tech industry cluster in central Taiwan, the CTSP now also includes campuses Huwei, Houli, Erli and Chung Hsing New Village.
It focuses on six primary high-tech sectors: optoelectronics, semiconductors, biotechnology, precision machinery, computers and peripherals, and green energy.
As of March 2018, 145 firms were operating in the park, creating almost 45,000 jobs. Existing and planned investment amounts to roughly NT$2.1 trillion. The 37 foreign-invested operations in the park include 15 Japanese companies in the LCD panel and semiconductor sectors.
In the future, the Ministry of Science and Technology expects CTSP to become even more of a semiconductor manufacturing powerhouse. The park already has nine “gigafabs” (facilities with monthly capacities of 80,000 to 100,000 wafers), which mass produce 12-inch silicon wafers. More such facilities will be built in the future to meet market demand.
CTSP Director-general Chen Ming-huang notes that Taiwan Semiconductor Manufacturing Co., the world’s top contract chipmaker, produces chips made on its advanced 10-nanometer and 7-nanometer processes in the park. In addition to TSMC, LCD panel maker AU Optronics and U.S. chipmaker Micron have been important contributors to CTSP’s success.
K.C. Hsu, Chairman of Micron Memory Taiwan, lauds CTSP for its support of the company’s DRAM Center of Excellence in Taiwan. He cites such benefits as tax incentives and bonded warehouses, as well as the high-quality infrastructure including water and electricity supply and wastewater treatment.
In October 2018, Micron launched a back-end facility for DRAM production in CTSP. Manish Bhatia, Micron’s Executive Vice President of Global Operations, was quoted by the media at the time as saying that the facility would help Micron “vertically integrate its resources and move closer to setting up a semiconductor ecosystem.”
Southern Taiwan Science Park
The Southern Taiwan Science Park (STSP) is made up of two campuses – one in Tainan and one in Kaohsiung – that host a total of 222 companies. The park is notable for its important role in TSMC’s supply chain as well as its focus on optoelectronics, green energy and medical devices.
TSMC will launch 5-nanometer and 3-nanometer foundries in the Tainan park over the next four years. The 5-nanometer chips will go into production in late 2019 or early 2020, and the 3-nanometer fab in late 2022 or early 2023. The company has pledged to spend over US$16 billion on the 5-nanometer fab and more than US$20 billion – its largest investment ever – to build the 3-nanometer facility.
In a post on its website, the Ministry of Science and Technology says that TSMC’s plans “have helped the Tainan Science Park attract some of the world’s other top manufacturers and build the world’s largest IC industry cluster.”
In the optoelectronics industry, the Tainan Science Park is a key production base for local LCD makers Innolux, Hannstar, and Hannstouch, who produce displays for smartphones and tablets. The Ministry refers to the complete supply chain in the park as being “of strategic importance.”
In addition, the government is supporting the Tainan Science Park in its effort to build a green energy industry ecosystem, in line with the Tsai Ing-wen administration’s 5+2 Innovative Industries initiative.
For its part, the Kaohsiung campus is cultivating a niche in high-tech healthcare – medical devices in particular. ITRI has developed Taiwan’s first 3D medical device printing and manufacturing workstation there.