Taiwan Business in Brief – November 2020

Business Alliance Event Held in Taipei

The 2020 Taiwan Business Alliance Conference, an annual event organized by the Ministry of Economic Affairs to promote investment in Taiwan, took place at the Taipei International Convention Center on October 7. This year’s event focused on opportunities for foreign companies in Taiwan amid the combined impact of the U.S.-China trade dispute and the COVID-19 pandemic.

In opening remarks, Minister of Economic Affairs Wang Mei-hua said that while global investment is predicted to fall by 40% this year, the decision of many Taiwanese businesses to re-shore production has ensured stable economic growth throughout the pandemic.

Wang’s speech was followed by a presentation by PricewaterhouseCoopers Taiwan Chairman and CEO Joseph Chau regarding supply chain restructuring, digital transformation, and Taiwan’s attractiveness for foreign enterprises looking to redirect investment or move business operations out of China.

Chau noted that PwC’s Summer 2020 Global CEO Survey found that over 70% of large U.S. companies do not have plans to relocate, and that companies will increasingly consider “China+1” strategies, which would involve moving part of their production to other countries in the region.

Among the other presenters at the conference was Cisco Taiwan General Manager Jeffrey Wang, who discussed the potential investment and collaborative opportunities associated with Taiwan’s introduction of 5G this year.

The conference concluded with a panel featuring Cadence Taiwan General Manager Brian Sung, Air Liquide Far Eastern Taiwan President & Greater China Cluster Electronics Vice President Olivier Blachier, and Itochu Taiwan Chairman & President Shuji Oe. The session was moderated by Industrial Technology Research Institute Executive Vice President Chang Pei-zen. The panelists shared their respective companies’ experiences investing and doing business in Taiwan, and analyzed Taiwan’s comparative strengths, as well as areas still in need of improvement.

Microsoft Unveils Data Center Plans

Microsoft announced plans at an October 26 press conference to build an Azure data center in Taiwan, the first facility of its kind on the island. The center would constitute the U.S. tech giant’s largest investment in its more than 30 years of operation in Taiwan.

Microsoft Taiwan General Manager Ken Sun said that the choice of Taiwan for the site was based on the strength of the local partners, the island’s comparatively good economic conditions, and a receptive government.

In order to stimulate Taiwan’s digital transformation, Microsoft also said it will train 200,000 local talent and undertake other initiatives related to AI hardware and cloud computing development in Taiwan. The company says that such efforts will help to better position Taiwan as a regional hub for building advanced cloud software and hardware infrastructure to support AI, IoT, and edge solutions.

President Tsai attended the press conference, where she applauded Microsoft’s proposed investment, describing it as one more milestone in a series of major investment projects the company has undertaken since she took office in 2016. These included the establishment of an IoT innovation center in 2016 and an AI R&D center in 2018.

“These investments can effectively drive the development of Taiwan’s cloud industry, boost innovative momentum in our industries, and ensure that the world is aware of Taiwan’s formidable R&D capabilities,” Tsai said.

Hon Hai Looks to EV Development

Hon Hai Precision Co., Taiwan’s largest contract manufacturer of electronics, announced in October its intention to expand its automotive business, with the aim of gaining a 10% share of the global electric vehicle market by 2025. The company, also known outside of Taiwan as Foxconn, cited a decrease in its core consumer electronics business as a factor in its decision.

Hon Hai Chairman Young Liu noted that the company will use an “open” platform for the hardware and software it produces for EV companies – meaning that it can be accessed and improved upon by other developers. Liu said that this approach will reduce the amount of repeat investment and improve the competitiveness and efficiency of Taiwan’s EV supply chain. Hon Hai also intends to produce a solid state battery, which could eventually eliminate the EV industry’s current reliance on lithium-ion batteries, by 2024.

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