The bulk of Taiwanese exports are IT-related and account for about half of the country's GDP, so a rise in exports is a major boost to the economy as a whole, which grew 6.9% in the third quarter of this year.
Third quarter reports showed that Taiwan's exports increased 17.99% after five consecutive months of growth. The growth was attributed to robust IT-related exports, including notebook PCs, other hardware and wireless technology.
According to US market researcher DisplaySearch, of the 29m notebook PCs shipped during the third quarter of this year, 89% were made in Taiwan. DisplaySearch also reported that many PC brands, such as HP, Dell and Apple - as well as Taiwan's Acer-Gateway, which recently underwent a merger - outsourced 100% of their core notebook PC housing assembly parts to subcontractors, spreading the effects of strong sales throughout the supply chain.
Quanta Computer, Compal Electronics and Wistron, all Taiwan-based companies, were the world's leading contract suppliers for notebook PCs in the third quarter, commanding a 34%, 24% and 13% share, respectively, of the global market for outsourced notebook PCs. Overall, HP's worldwide notebook market share registered 21.4% while Acer's share was 16.2% and Dell's was 13.8%.
Acer recently acquired Gateway Computers, the third-largest computer manufacturer in the US, for $710m. Earlier this month Acer told media it expects sales to shoot up by at least 50% in the next four years, anticipating sales of at least $20bn in 2008 and $40bn by 2012. Acer shipped 4.7m notebooks during the third quarter of 2007.
Just as such moves have boosted manufacturing and subcontracting companies, they will also help other firms in the IT hardware supply chain, as Taiwan exports 90% of the world's computer motherboards and 40% of the world's flat panel displays. Taiwan is also home to the world's top two contract chip manufacturers, Taiwan Semiconductor Manufacturing Corporation (TSMC) and United Microelectronics Corporation.
Another Taiwanese company, TMSC, has recently made a significant acquisition in North America. In October 2007 TSMC bought a chip design startup, Emerging Memory Technologies (EMT) of Canada, making it one of Taiwan's first foreign investment ventures in Canada.
The value added to Taiwanese tech firms has also recently been given a boost by a joint venture with Japan's Fujitsu. Fujitsu and Taiwan's government-backed Institution for Information Industry told local press they are in the process of establishing a venture to provide WiMax (worldwide interoperability for microwave access) software to enable high-speed wireless networks, increasing the speed of internet access by four or five times that of standard broadband. The venture is to be set up in March of 2008 at a cost of $5m. A team formed from both institutions will design software that links WiMax handsets to base stations and then sell the application to Taiwanese firms.
In November, Taiwan's ministry of economic affairs signed a memorandum of understanding with five telecoms equipment companies who are to launch fourth-generation WiMax technology in Taiwan by 2008. The five companies chosen to carry out the launch are Alcatel-Lucent, Motorola, Nokia Siemens, Sprint Nextel, and Starent Networks.
With rising sales throughout the supply chain for Taiwan's hardware manufacturers, greater value added for its exports, and the advent of fourth-generation WiMax, the island's IT sector - and economy as a whole - are looking strong.