Bbk machinery industry taiwan june 2013

Page 1

June 2013

MACHINERY INDUSTRY IN TAIWAN

OFFICIAL PROGRAM


MACHINERY INDUSTRY IN TAIWAN Language: English Number of pages: 45 Author: Trade Office of Swiss Industries (TOSI), Taiwan Other architectural Reports: Are you interested in other architectural Reports for other sectors and countries? Please find more Reports here: www.switzerland-ge.com

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Contents

8.1. Industry overview ________________________ 38

1. INTRODUCTION _____________________________6 2. OVERVIEW OF TAIWAN MACHINERY INDUSTRY _8 2.1. Characteristics of the industry _________________ 8 2.2. Industrial development _____________________ 8

8.2. Import/export analysis _____________________ 38

9. OUTLOOK OF MACHINERY INDUSTRY _________ 39 10. APPENDIX ________________________________ 40 10.1. Machinery Related Trade Fairs _______________ 40

3. FOREIGN TRADE OF TAIWAN MACHINERY _____14 3.1. Current Development ______________________ 14 3.2. 3.2 Swiss machinery in Taiwan market ___________17

4. DOWNSTREAM INDUSTRIES’ DEVELOPMENT AND MARKET TREND______________________________19 4.1. Semiconductor industry ____________________ 19 4.2. Printed circuit board industry ________________ 20 4.3. Panel display industry _____________________ 21 4.4. Green energy industry _____________________ 22 4.5. 3C industry _____________________________ 23

5. MACHINE TOOL INDUSTRY __________________28 5.1. Industry overview ________________________ 28 5.2. Industrial development and trend _____________ 28

6. HI-TECH EQUIPMENT INDUSTRY ______________31 6.1. Semiconductor-manufacturing equipment industry __ 31 6.2. Panel display production-equipment manufacturingindustry 32

7. ROBOT INDUSTRY __________________________35 7.1. Industry overview ________________________ 35 7.2. Industrial development and trend _____________ 35

8. MECHANICAL CRITICAL COMPONENTS________38

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10.2. Associations and Other Sources ______________ 40 10.3. Custom Tariffs __________________________ 41


List of tables

Table 1. General machinery industry – category and scope ______________________________________________ 7 Table 2. R&D staffs _______________________________________________________________________ 10 Table 3. Number of employees ________________________________________________________________ 10 Table 4. Taiwan industries’ ranks in the world ______________________________________________________ 11 Table 5. Exports of Taiwan-made machinery by products ______________________________________________ 14 Table 6. Imports of general machinery by products __________________________________________________ 15 Table 7. Exports of Taiwan-made machinery by country ______________________________________________ 15 Table 8. Imports of general machinery, 2012 by country ______________________________________________ 16 Table 9. Swiss Machinery Exports to Taiwan ______________________________________________________ 17 Table 10. Major indexes of Taiwan’s IC packaging & testing industry ______________________________________ 20 Table 11. 3C industry’s development and market trend _______________________________________________ 23 Table 12. Ball screw industry’s output values in recent years ____________________________________________ 38 Table 13. Ball screw imports & exports __________________________________________________________ 38 Table 14. Custom tariffs for selected machinery products for Swiss exports __________________________________ 41

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List of graphics

Graphic 1. Trend of overall machinery industry ................................................................................................................................ 12 Graphic 2. Trend of machine tool industry ........................................................................................................................................ 12 Graphic 3. Trend of hi-tech equipment industry ............................................................................................................................... 12 Graphic 4. Trend of robot industry..................................................................................................................................................... 13 Graphic 5. Trend of key component industry .................................................................................................................................... 13 Graphic 6. Development of Swiss Machinery Exports to Taiwan ..................................................................................................... 17 Graphic 7. IC output value .................................................................................................................................................................. 19 Graphic 8. IC packaging & testing industry’s output value ............................................................................................................... 19 Graphic 9. Printed circuit board market size .................................................................................................................................... 20 Graphic 10. Large TFT LCD market size and trend ........................................................................................................................... 21 Graphic 11. Small & medium size TFT LCD market size and trend .................................................................................................. 21 Graphic 12. Solar photoelectric industry’s development and market trend .................................................................................... 22 Graphic 13. LED component industry’s development and market trend ........................................................................................ 23 Graphic 14. PC shipment and growth ................................................................................................................................................ 24 Graphic 15. NB shipment and growth ............................................................................................................................................... 24 Graphic 16. MB shipment and growth............................................................................................................................................... 25 Graphic 17. Mobile phone shipment and growth .............................................................................................................................. 25 Graphic 18. Digital camera shipment and growth ............................................................................................................................ 26 Graphic 19. Taiwan’s LCD monitor shipment and growth ............................................................................................................... 26 Graphic 20. LCD TV shipment and growth ....................................................................................................................................... 27 Graphic 21. Taiwan-made machine tool market (including domestic and overseas markets) ....................................................... 29 Graphic 22. Industrial cluster of machine tool ................................................................................................................................. 30 Graphic 23. Semiconductor-manufacturing equipment market (including overseas & domestic markets) trend ....................... 32 Graphic 24. Panel display production-equipment market trend ..................................................................................................... 34 Graphic 25. Industrial robot market demand ........................................................................................................................................ 36 Graphic 26. Industrial robot annual export (value & quantity) ....................................................................................................... 36 Graphic 27. Industrial robot’s annual import (value & quantity) .....................................................................................................37

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1. Introduction The machinery industry serves as a fundamental industry that satisfies the strategic needs of an economy. There is a high level of connection between machinery industry and all other industries. Therefore, the machinery industry is considered a major industry. It is important to note that mechanical manufacturing technologies play an essential role for other industries, for economic growth, and for the creation of job opportunities. The machinery industry involves many trades and it can be interpreted either in a broad sense or in a narrow sense. If interpreted in a broad sense, the machinery industry consists of five segments, namely: general mechanical equipments, electric mechanical equipments, transportation equipments, precision machinery, and metal products. 1.

General mechanical equipment General mechanical equipment includes machine tools, textile machines, carpentry mechanical equipment, and plastic mechanical equipment as well as non-electric mechanical equipment for families and offices, such as sewing machines and typewriters.

2.

Electric mechanical equipment Electric mechanical equipment refers to all equipment designed for power generation and transmissions, such as power generators, motors, transformers, and switches.

3.

Transportation equipment Transportation equipment includes automobiles, motorcycles, bicycles, boats, airplanes, trains, and related accessories.

4.

Sophisticated machinery Sophisticated machinery includes clocks and watches, cameras, optical instruments, medical equipments, etc.

5.

Metal products Metal products include metal tools, screws, hardware parts, non-metal products, etc.

In this report the machinery industry is interpreted in a narrow sense in which general mechanical equipment is considered the main segment. It focuses on all such mechanical equipment and auxiliary equipment designed solely for manufacturing needs, such as metal-processing machines, industrial machines, production machines, electronic manufacturing equipment, universal machines, conveyance & automated equipment, metal molds, other machinery equipment and components. The machinery industry serves the needs of all other industries. It is, therefore, not possible to list all industries being served by the machinery industry. Therefore, this report focuses on four major mechanical industries, namely, machine tools, hi-tech equipments, robots, and key components as shown by the following table.

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Table 1. General machinery industry – category and scope

Product category Machine tools

Hi-tech equipment Robots

Key components Agricultural machinery Construction machinery equipment Food-processing machinery equipment Sewing machine Textile machinery equipment Timber machinery equipment

Chemical machinery equipments Rubber & plastic machinery equipments Paper machines and processing machines Printing machines Gas compressors Pumps for fluid Valves Bearings Power transmission devices Conveyance and shipment machinery equipment Packaging machines Central air-conditioning and cooling equipment Industrial furnace and heaters Other machinery equipment

Product details NC lathe, other lathes, drilling machine, milling machine, sawing machine, grinding machine, machining center, other NC machine tools, other machine centers, unconventional pressing machines, hydraulic pressing machines, and metal molding machines. Semiconductor and LCD manufacturing equipment Robots are divided into 7 categories: handling operations / machine tending, processing, welding / soldering, dispersing, assembly / disassembly, clean room, and others. Ball screws Tiller, sprayer, and other agricultural machinery equipments Concrete blending machine, hydraulic breaking machine, and cranes Rice-grinding machine, other food-processing machines and parts Sewing machines for industrial use, and sewing machines for family use Shuttleless fiber machine, knitting machine, dyeing and finishing machinery equipments, other textile machinery equipments and parts Plywood machinery equipment, sawing machine, planer, lathe, grinder, rotary sander or polishing machine, other carpentry machinery equipments and parts Chemical machinery equipments and parts Plastic injection & molding machine, rubber/plastic extrusion machine, other rubber/plastic machinery equipments and parts Paper machines and parts Printers, other printing machines and parts Air compressors, coolant compressors, vacuum pumps, industrial fans Pumps for fluids, and other pumps Bronze valves, brass valves, balls, globes, disk valves, check valves, metal valves, etc. Ball bearings, roller bearings, sliding bearings (plain shaft bearings), and bearing swivel combinations. Gears, transmission boxes, transmission shafts, guide rails, and lead screws Conveyors, forklifts, lifts, elevating stairways (escalators, elevators), other conveyance equipment and parts External packaging machines, internal packaging machines, individual packaging machines, packaging-related machines Central air-conditioning system, freezers, and cabinets. Boilers, blast furnace, converter, and annealing furnace Shoe machines, can machines, other manufacturing machines and parts, hazard prevention equipment, fountains, water dispensers, metal machinery equipment and parts, other unlisted machinery equipment and parts.

Source of data: Industrial Economics and Knowledge Research Center (IEK), Industrial Technology Research Institute (ITRI)

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2. Overview of Taiwan Machinery Industry 2.1. CHARACTERISTICS OF THE INDUSTRY 95% of manufacturers are small & medium businesses It is some kind of tradition for many Taiwanese to rather have their own their business than work for someone else. This mentality is quite obvious in the machinery industry. In Taiwan, machinery equipment factory employees open their businesses several years after they work for their employers. After they open their businesses, their employees open their own businesses several years later, and so on so forth. As a result, 95 % of machinery equipment factories have 100 employees or fewer; an average factory has 20 employees or fewer. According to the analysis of business revenues, nearly 90 % of machinery equipment corporations’ annual sale is less than NT$50 million. Employees’ high turnover ratio means a high level of homogeneity of products. Naturally, machinery equipment factories have a hard time maintaining their technological competitiveness. Regional characteristics On the island, every region’s machinery industry serves the needs of other industries in that region. It is important, therefore, to note the relationship between machinery industry and other industries. For example, Taichung has a supply chain comprising forging-iron, machinery processing, and component manufacturers. Thus, machine tool factories grow significantly in Taichung. Chaunghwa and Tainan have many textile factories. As a result, textile machinery equipment factories grow dramatically in both regions. Other examples include Taina’s plastic machinery industry, Fengyuen’s carpentry machinery industry, Gunshan’s bolts-and-nuts industry, Kaohsiung and Taoyuans’ chemical industry, and Hualien’s jewel processing machinery industry. In Taiwan, the machinery industry develops differently in different regions. Specialized in assembly The component supply chain is pretty much self-sufficient. Most machinery corporations are small & medium businesses that are short of financial strength, manpower, resources, and technical capabilities. Production processes differ from manufacturer to manufacturer. Some manufacturers are specialized in maintenance; some specialized in machinery equipment production; and some manufacturers provide customized machinery equipments. It is important to note that most manufacturers are specialized in assembly. Apparently, different manufacturers adopt different processes. Few manufacturers have the capability to integrate the entire production process. Information not shared and unwilling to pay for information Most local machinery factories are conservative and unwilling to contact outsiders. Manufacturers are unwilling to share information with the others and unwilling to pay for information. As a result, machinery manufacturers hardly have any access to the information regarding industrial trends.

2.2. INDUSTRIAL DEVELOPMENT Beginning Period In the 1960s, the Taiwan government listed machinery industry as a key industry. Soon, the machinery industry began to grow. As a result, the sewing machines, bicycles, and textile machine industries grew dramatically in the 1960s. In the beginning, Taiwan manufactures machine tools for the manufacturing industries. Then, machine tool industry developed dramatically when Taiwan’s economy grew. The government launched a “four-year economic plan” to boost export growth. At that time, Taiwan’s machinery equipment quality was not comparable to the developed countries’ machinery equipment, but prices were considerably lower. Developing nations began to import Taiwanese machinery equipment. Southeast Asian nations were the primary markets and Vietnam was the most important market at that time. In the beginning period, Taiwan’s light industry developed significantly. Manufacturers needed more and more production equipment and thus quality became a major concern. Meanwhile, a number of new industries were brought to Taiwan, such as petrochemical, fiber, steel, shipbuilding, and automobile/motorcycle, and thus Taiwan’s industrial structure began to change and meanwhile machinery manufacturers started to export their products.

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Growth Period In the 1980s, the government launched “10-year economic development plan” in which machinery industry was listed as a strategic industry. Then, the government established a taskforce to research machinery industry and thus initiated “Regulation of Governing and Assisting Machinery Industry”. In 1982, the government promulgated the “Industry Automation Plan”. This plan not only imposed a far-reaching influence on machinery industry’s production capacity and product quality, but also laid a solid foundation for Taiwan’s OEM industry. In this period, the Bureau of Industrial Development (IDB), Ministry of Economic Affairs (MOEA), appointed the Industrial Technology Research Institute (ITRI) to establish the “machinery industry’s component standardization” criteria. Machinery manufacturers formulated standardization procedures for their components in accordance with the criteria and thereby established a self-sufficient component supply chain. At that time, Taiwan was the second largest exporter of shoes machinery equipment and the third largest exporter of carpentry machinery equipment worldwide. The country’s plastic machinery equipment export sales were the third largest, and machine tool the eighth largest. Made-In-Taiwan Period In 1970s, the government, private R&D centers, and manufacturers worked together to develop the next-generation high-scale machine tools. Thus, Taiwan’s machinery industry started to manufacture semiconductor equipments in the capacity of electronic OEM manufacturers. In this period Taiwan was noted for its machine tool output value. In an effort to upgrade Taiwan’s machine tool technological capabilities, ITRI transferred motor’s built-in hi-speed spindle technologies from Switzerland’s IBAG to Taiwan. In 1994, Taiwan completed a built-in hi-speed spindle by itself for the first time. The technologies were assigned to machine tool manufacturers, allowing them to develop the sophisticated key components that were required by hi-speed processingmachinery equipments. Hi-speed spindles were widely accepted by local manufacturers and were thus integrated into production process by most manufacturers. In 1995, ITRI began to develop machine tool molding technologies and assisted a number of manufacturers to develop hispeed processing-machines. Then, Taiwan’s machine tool manufacturers started to produce hi-speed machine tools and began to export machine tools to Europe and the US. The government continued to inject R&D expenditures. As a result, manufacturers upgraded C-grade machine tool (average unit price NT$1 million) to B-grade machine tool (average unit price NT$3 million) and thus increased the output value of machine tools. Global Competition Period The nation’s machinery industry began to seriously compete in the international market when the 21st century unfolded. It works closely with R&D institutions. ITRI transferred linear motor machine tool technologies from Germany’s Darmstadt University to Taiwan. In 2001, the first Made-In-Taiwan linear motor machine tool was exhibited at the Taipei International Machine Tool Show (TIMTOS). The Taiwan-made linear motor machine tool drew attention from all major manufacturers on the island. More and more manufacturers participated in the R&D of linear motor machine tools and thus set a milestone for the Taiwan-made machine tools. In 2000, companies began to inject huge amounts of funds into the production of semiconductors, LED, solar batteries, and LCD using the manufacturing equipments imported from foreign countries. Taiwan’s manufacturers supplied the equipment needed for cleaning, shipment, and tests. Later on, Taiwan’s precision machinery manufacturers developed universal process equipments, and created core technologies and applied techniques. With its core technologies, the precision machinery industry became the second largest sub-industry in Taiwan’s machinery industry. Now, Taiwan’s machinery industry is progressively developing hi-speed, highly accurate and highly valued machinery equipment. In the last few years, the machinery industry focused on the highly valued linear machine tools and compound machine tool equipments using precise, systematic, and intelligent technologies, in addition to the semiconductor process equipment and image display process equipment.

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Table 2. R&D staffs

Unit: persons Industry Machinery industry (Overall)

2009 6,519

2010 6,182

2011 6,559

2012 6,738

Machine tool industry

681

747

745

758

Hi-tech equipment industry

238

281

359

398

Robot industry

178

198

207

215

Key component industry

845

888

959

986

Unit: 1,000 persons Industry Machinery industry (Overall)

2009 230

2010 219

2011 233

2012 234

Machine tool industry

27

30

30

30

Hi-tech equipment industry

10

12

15

15

Descriptions In the last few years, Taiwan’s machinery industry began to develop highly valued products, such as precision machines and hitech equipments. Manufacturers employed more R&D staffs than before. The industry will focus on the R&D of intelligent automation and green energy equipments in the future. Related R&D staffs are needed. Large and compound machine tools are needed when all industries are developing actively. With domestic electronic industry continues to develop, more and more Taiwan-made semiconductors and LCD are produced. With the process technologies to be upgraded, hitech equipment manufacturers require R&D staffs to accelerate technological development. Robots are constantly needed by all industries. All manufacturers require specialties to create core capabilities and thereby catch up with the trend of automation. The number of key component manufacturers continues to increase, and more R&D staffs are needed than before.

Source of data: IEK, ITRI Table 3. Number of employees

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Descriptions To catch up with the trend of intelligent automation, machinery industry requires additional employees. The number of machine tool industry’s employees grew insignificantly because electric & mechanical manufacturers and machinery manufacturers had a hard time in finding ideal employees. Usually, hi-tech industries, such as electronic manufacturers and photoelectric manufacturers, have it easier to find employees. Companies expect that demand will grow. Therefore, machine tool manufacturers are planning to employ more staff in order to serve the market needs. Electronic industry continues to purchase Taiwan-made equipment and consequently hitech equipment manufacturers are recruiting staffs more than before. A number of manufacturers are recruiting production staff and R&D staff from China. Hi-tech manufacturers are expected to downsize their manpower in the future.


Robot industry

5.7

6.4

6.7

6.7

At the time when Chinese workers’ wages increase dramatically, manufacturers resort to robots and thus automation becomes a possible solution for manufacturers. Moreover, robots are a perfect tool to handle purchase orders that comprise many items with small quantities of each item. As a result, robots are becoming more popular than ever.

Key component industry

26

27

29

29

Taiwan’s key components are highly competitive in the international market. More and more manufacturers are building new factories. The number of employees is increasing steadily.

Source of data: IEK, ITRI Table 4. Taiwan industries’ ranks in the world

Unit: US$ million Industry Machinery industry (overall)

Machine tool industry

Hi-tech equipment industry

Robot industry

Key component industry

Source of data: IEK, ITRI

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Year 2010 2011 2012 2013 (f) 2014 (f) 2010 2011 2012 2013 (f) 2014 (f) 2010 2011 2012 2013 (f) 2014 (f) 2010 2011 2012 2013 (f) 2014 (f) 2010 2011 2012 2013 (f) 2014 (f)

Rank 10 9 9 9 9 6 6 6 6 5 4 4 4 4 4 10 10 10 10 10 2 2 2 2 2

Output value 27,167 33,538 32,517 32,729 33,482 3,877 5,000 4,144 4,123 4,131 3,148 3,760 2,863 2,944 3,052 111 157 165 173 183 217 274 258 276 297

Worldwide market share 3.16 % 3.39 % 3.36 % 3.33 % 3.33 % 5.5 % 5.3 % 5.0 % 4.7 % 4.5 % 5.94 % 6.90 % 5.21 % 5.04 % 5.81 % 1.95 % 2.34 % 2.41 % 2.39 % 2.28 % 15.31 % 15.31 % 15.64 % 15.92 % 16.30 %


Graphic 1. Trend of overall machinery industry

(NT$ million) 1'050'000 1'000'000

100.0%

85.5% 988'041

1'004'454 966'408

981'871

80.0%

950'000 900'000

60.0% 40.0%

859'567

14.9%

850'000

20.0% -2.19%

800'000

1.6%

2.3% 0.0%

750'000

-20.0% 2010

2011 Production 2012(e) 2013(f) 2014(f) value Growth rate

Source of data: IEK, ITRI Graphic 2. Trend of machine tool industry

(NT$ million) 200'000

100.00% 85.50% 168'919 164'210 164'247 166'583

150'000

131'807

80.00% 60.00% 40.00%

24.60%

100'000

20.00% 0.02% 1.40%

1.40%

50'000

0.00% 2010

2011 2012(e) 2013(f) 2014(f) Production value Growth rate

Source of data: IEK, ITRI Graphic 3. Trend of hi-tech equipment industry

(NT$ million) 200'000

100.00% 85.50% 168'919 164'210 164'247 166'583

150'000

131'807

60.00% 40.00%

24.60%

100'000

80.00%

20.00% 0.02% 1.40%

1.40%

50'000

0.00% 2010

2011 2012(e) 2013(f) 2014(f) Production value Growth rate

Source of data: IEK, ITRI

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Graphic 4. Trend of robot industry

(NT$ million) 120'000 100'000

150%

129% 110'924 99'470 85'033

88'326

91'549 100%

80'000 60'000

50% 12%

40'000

4%

4% 0%

-23% 20'000 0

-50% 2010

2011 2012(e) 2013(f) Production value Growth rate

2014(f)

Source of data: IEK, ITRI Graphic 5. Trend of key component industry

(NT$ million) 6'000

31%

5'000 4'000

4'616

4'893

5'186

5'497

35% 30% 25%

3'517

20% 3'000 15% 2'000 1'000

6%

10%

6%

6%

5%

0

0% 2010

2011

Source of data: IEK, ITRI

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10%

2012(e) 2013(f) Production value Growth rate

2014(f)


3. Foreign Trade of Taiwan Machinery 3.1. CURRENT DEVELOPMENT Based on statistics compiled by the Taiwan Association of Machinery Industry (TAMI), local exports of machinery fell 1.7 % to US$20.75 billion in 2012. Machine tools ranked first with an export amount of US$4.24 billion (+5.9 %). Plastic and rubber machinery came second with US$1.35 billion (+0.7 %). Bearings, gears, ball screws were third, amounting to US$1.22 billion (8.3 %) and other special machinery was fourth (-6.8 %) and pumps, compressors, fans ranked fifth (+0.9 %). According to TAMI, the nation’s machinery exports between 2013 and 2015 will consist mostly of machine tools, plastic & rubber machinery, as well as bearings, gears, ball screws. The import value of machinery reached US$22.13 billion (-13.1 %). Imports of machinery for the high-tech industries such as semiconductor, IC, and 3C industries, amounted to US$10.1 billion, and accounted for 45.7 % of total machinery imports. Engines & parts ranked second with an amount of US$1.27 billion, and a share of 5.8 % (+9.2 %), followed by pumps, fans, compressors with a share of 5.4 % of the total and negative growth of 13.2 %. Table 5. Exports of Taiwan-made machinery by products

Unit: US$1,000 2012 Products Rank

2012 Value

%

Value

Change (%)

1

Machine Tools

4,236,448

20.4

4,000,922

5.9

2

Plastics & Rubber Machinery

1,349,271

6.5

1,339,237

0.7

3

Bearings, Gears, Ball Screws

1,222,990

5.9

1,333,257

-8.3

4

Other Special Machinery

1,219,810

5.9

1,308,640

-6.8

5

Pumps, Compressors, Fans

1,177,263

5.7

1,166,507

0.9

6

Valves & Parts

1,151,653

5.6

1,131,183

1.8

7

Paper Making, Printing Machinery

901,247

4.3

917,654

-1.8

8

Parts & components

875,228

4.2

1,004,241

-12.8

9

Textile Machinery

573,748

2.8

615,185

-6.7

10

Material Handling Equipment

529,298

2.6

560,207

-5.5

11

Molds & Dies

518,264

2.5

520,332

-0.4

12

Food & Packaging Machinery

501,316

2.4

471,094

6.4

13

Wood Working Machinery

485,060

2.3

539,952

-10.2

14

Sewing Machines, Leather & Shoes Making Machines Others

474,632

2.3

521,470

-9.0

5,531,923

26.7

5,676,463

-2.5

Total

20,748,151

100.0

21,106,344

-1.7

Source of data: Taiwan Association of Machinery Industry (TAMI)

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2011


Table 6. Imports of general machinery by products

Unit: US$1,000 2012 Products Rank

2012

2011

Value

%

Value

Change (%)

1

IC、Machinery for IC. Semiconductor

10,104,498

45.7%

10,749,157

-6.0%

2

Engines & Parts

1,272,584

5.8%

1,165,732

9.2%

3

Pumps, Fans, Compressors

1,189,799

5.4%

1,370,451

-13.2%

4

Other Special Machinery

1,099,273

5.0%

1,337,473

-17.8%

5

Components and Parts

875,587

4.0%

1,044,021

-16.1%

6

Valves & Parts

682,126

3.1%

793,392

-14.0%

7

Machine Tools

647,663

2.9%

828,916

-21.9%

8

Air Conditioning & Refrigerators

531,756

2.4%

546,077

-2.6%

9

Equipment for the Treatment of Material

461,052

2.1%

809,104

-43.0%

10

Machinery for Glassware

422,814

1.9%

637,390

-33.7%

11

Textile Machinery

374,518

1.7%

474,551

-21.1%

12

Handling Equipment

315,602

1.4%

499,613

-36.8%

13

Plastics & Rubber Machinery

310,442

1.4%

404,751

-23.3%

Others

3,842,534

17.4%

4,808,417

-20.1%

Total

22,130,248

100.0%

25,469,045

-13.1%

Source of data: Taiwan Association of Machinery Industry (TAMI)

Taiwan is one of the world's largest machinery exporters. More than 60 % of the production was exported, mainly to China, EU, ASEAN and the USA. In 2012, China/Hong Kong were the largest export outlet by absorbing US$6.48 billion of the machineries, showing a decline of 9.4 % and accounting for 31.2 % of the total exports. The US ranked second with US$3.19 billion, +6.3 %, and commanding 15.4 % of the total. Japan stood at third place with US$1.25 billion, reflecting an advance of 3.7 %. Exports to Thailand jumped to fourth position with a strong expansion of 29 % to reach US$950 million. Exports to Indonesia also grew considerably (+13.7 %), amounting to US$684 million. However, exports to Brazil, India and Vietnam shrunk between 8 to 25 %, phenomena which TAMI attributed to rival South Korean firms gaining a bigger market share on the back of their government’s free-trade agreements and comprehensive economic partnership agreements. For instance, South Korean companies have built several automotive manufacturing plants in India with zero-tariff treatments under the Comprehensive Economic Partnership Agreement, driving demand for South Korea-made machine tools up. As for 2013, TAMI expected that exports of machinery will rebound by 2.5 % to 5 %, but it is still largely determined by the development of China’s economy, the debt crises in Europe and the US. Moreover, the higher NT-dollar-to-greenback rate may be another uncertainty to sales of local machinery industry. The market potential in emerging markets such as Brazil, India, Turkey, Russia, ASEAN (Association of Southeast Asian Nations), and the Middle East offers interesting business opportunities for Taiwanese machinery manufacturers with good quality machines at reasonable prices. With the steadily increasing business in emerging markets, TAMI noted that local machinery suppliers are set to play an even more important role in these markets. Table 7. Exports of Taiwan-made machinery by country

Unit: US$1,000 2012 Country Rank

2012 Value

%

Value

Change (%)

1

China + Hong Kong

6,478,701

31.2

7,147,245

-9.4

2

USA

3,191,934

15.4

3,002,896

6.3

3

Japan

1,248,988

6.0

1,203,892

3.7

4

Thailand

950,269

4.6

734,448

29.4

5

Indonesia

683,928

3.3

601,651

13.7

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2011


6

Vietnam

615,792

3.0

666,193

-7.6

7

Germany

589,775

2.8

668,114

-11.7

8

Korea

492,065

2.4

501,230

-1.8

9

India

471,786

2.3

583,485

-19.1

10

Singapore

460,855

2.2

363,659

26.7

11

Malaysia

458,700

2.2

482,304

-4.9

12

Turkey

390,436

1.9

383,332

1.9

13

Netherlands

308,519

1.5

329,499

-6.4

14

UK

280,440

1.4

269,587

4.0

15

Brazil

250,484

1.2

321,665

-22.1

16

Russia

249,460

1.2

220,396

13.2

17

Italy

248,277

1.2

285,045

-12.9

18

Canada

243,839

1.2

234,369

4.0

19

Australia

220,631

1.1

231,026

-4.5

20

Philippines

220,631

1.1

231,026

-4.5

Others Total

2,692,641 20,748,151

13.0 100.0

2,645,282 21,106,344

1.7 -1.7

Source of data: Taiwan Association of Machinery Industry (TAMI)

Due to a weak capital demand and an unwillingness to expand local operations, machinery imports to the island dropped 13 % in 2012. Japan remained the island's largest supplier with an export value of US$7.58 billion of machineries, representing a drop of 18 % and accounting for 34 % of total imports. The US was the second largest supplier with US$4.19 billion, -9.3 %, and commanding 18.9 % of total imports. China/Hong Kong were on third place with a decrease of 3.8 % and accounting for 11.4 % of total. Germany was on the fifth spot with a steep decrease of 40.2 %, share 6.3 % of total. Swiss exports also fell sharply by 41.6 %, accounting for 1.4 % of the total. In addition to the drop of imports, on the consumption side of the equation, Taiwan’s demand for machineries also remained weak. Total equipment installed was worth US$993 billion, a 8.65 % decrease from 2011. However, demand for high valueadded, automated equipment for local high technology and semi-conductor industries accounted for the high volume of imported machineries. Table 8. Imports of general machinery, 2012 by country

Unit: US$1,000

2012 Rank 1 2 3 4 5 6 7 8 9 10

Country Japan USA China + Hong Kong Netherlands Germany Korea Switzerland Italy UK France Others Total

Source of data: Taiwan Association of Machinery Industry (TAMI)

MACHINERY INDUSTRY IN TAIWAN

16

2012 Value 7,581,571 4,190,070 2,530,105 2,255,894 1,383,538 594,971 308,715 264,532 233,513 154,533 2,632,806 22,130,248

% 34.3 18.9 11.4 10.2 6.3 2.7 1.4 1.2 1.1 0.7 11.9 100.0

2011 Value 9,246,801 4,617,852 2,629,049 1,901,435 2,312,167 726,672 528,225 482,514 296,938 159,055 2,568,337 25,469,045

Change (%) -18.0 -9.3 -3.8 18.6 -40.2 -18.1 -41.6 -45.2 -21.4 -2.8 2.5 -13.1


3.2. 3.2 SWISS MACHINERY IN TAIWAN MARKET Exports of Swiss machinery to Taiwan market have shown a steady increase over the years, only interrupted by the 2009 and 2012’s global economic crisis. Some 25 years ago, Swiss textile machines were the leading export item to Taiwan, due to the vast expansion of this industry on the island. Swiss textile machines accounted for over 40 % of the total Swiss exports at that time. The restructuring and the establishment of other local industries gradually generated a new demand of other production equipment from Swiss suppliers. In the last decade machine tools, tools, machinery for electronics/semiconductor/flat panel display as well as paper, printing, packaging and welding machines have become the principle machinery exports to Taiwan, while textiles machines exports decreased to a small percentage figure. They have been replaced by IT related production machineries. Graphic 6. Development of Swiss Machinery Exports to Taiwan

(CHF million) 800 700 600 500 400 300 200 100 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

0

Source: Swissmem

Switzerland sees Taiwan as one of its important machinery market. Citing machine tools as an example, Switzerland was the island’s second-largest supplier in 2011, only after Japan, with sales of over US$70 million (+50 %) and accounting for 9 % of Taiwan’s total machine tool imports, according to local customs statistics. However, the sluggish investment and business climate had a strong impact on exports of Swiss machinery in the following year. Swiss exports of machinery dropped 40 % in 2012, mainly due to the fact that domestic enterprises in major industries, such as semiconductor and electronics have already completed another investment cycle in 2010/2011 and were reluctant to expand due to the economic slowdown. Table 9. Swiss Machinery Exports to Taiwan

Unit: CHF million Category Machinery, apparatus, electronics ·Industrial machinery ···Engines non-electrical ···Construction machinery ···Machinery engineering ····Pumps, compressors, fans, etc. ····Process engineering, heating, cooling equip. ····Lifting and handling equipment ····Machine-tools metalworking ····Machine-tools for mineral materials ····Plastics-, Rubber machinery ····Machine-tools for wood, cork, etc. ····Other machinery ····Hand held tools ····Welding machines

MACHINERY INDUSTRY IN TAIWAN

17

2012 305.0 235.2 51.6 1.1 182.4 18.1 8.4

-38.4 -42.6 68.0 11.9 -51.7 -11.3 -46.2

17.7 13.7 3.0 0.1 10.6 1.1 0.5

2011 495.3 409.5 30.7 1.0 377.8 20.4 15.5

2010 422.9 303.6 53.3 0.7 249.5 19.5 12.7

2009 251.6 182.8 24.4 0.6 157.9 ---

2008 497.5 388.2 27.3 0.6 360.3 ---

1.5 56.5 2.2 1.7 1.8 57.3 0.6 3.4

-70.5 -7.2 -94.5 -67.3 -58.4 -67.5 -49.3 -20.8

0.1 3.3 0.1 0.1 0.1 3.3 0.0 0.2

5.0 60.8 40.6 5.3 4.3 176.4 1.1 4.3

2.3 65.5 3.2 10.3 5.4 79.3 0.9 3.3

---------

---------


····Printing and paper machinery ····Textile machines ····Food processing equipment ····Filtering and purifying machines ····Packaging and filling machines ··Agricultural machines ··Household appliances ···Entertainment electronics ···Household machines ··Office machines ··Electrical machinery and electronics ···Power generation, electric motors ···Telecommunications ···Electric and electronic articles ····Electronic parts ····Electrical switchgear and cables ····Control, signaling and measuring instr. ····Other electrical machinery and apparatus ··Defense equipment

8.4 14.8 2.1 1.1 4.5 0.1 5.2 1.4 3.8 3.0 61.5 11.8 4.7 45.0 14.9 9.2 6.4 14.5

68.6 -48.3 -60.7 -45.3 55.0 -26.5 -6.8 -57.1 69.0 -29.1 -18.9 6.4 313.9 -29.3 -26.9 -11.9 -21.9 -41.2

0.5 0.9 0.1 0.1 0.3 0.0 0.3 0.1 0.2 0.2 3.6 0.7 0.3 2.6 0.9 0.5 0.4 0.8

5.0 28.7 5.3 2.1 2.9 0.1 5.6 3.4 2.2 4.2 75.9 11.1 1.1 63.6 20.3 10.4 8.2 24.7

6.0 29.7 1.2 5.5 4.7 0.0 5.1 3.1 2.0 5.4 108.7 12.7 1.0 95.0 21.7 14.1 6.5 52.7

-----0.0 2.6 0.9 1.7 4.2 61.9 6.3 2.5 53.0 -----

-----0.0 3.0 1.1 1.9 5.3 100.9 13.6 4.7 82.6 -----

0.1

274.9

0.0

0.0

0.0

0.0

0.0

Source: Swissmem

During the course of the past 20 years, Taiwanese companies began to shift more and more of their production offshore to other places in the region such as China, Vietnam, South-East Asia, which resulted in a gradual decrease of the share of direct exports of capital equipment goods to Taiwan. Even though Taiwanese companies still continue to buy a considerable amount of Swiss machines for their investment projects abroad, the purchases are, however, not reflected in the trade statistics to Taiwan as shipments go direct to their off-shore factories abroad. With new investments in high-tech areas and the upgrading of existing production sites in Taiwan, the demand for Swiss machines remains intact, but the share of machines of total Swiss exports has been declining. Further, with the recent implementation of the cross-Taiwan Strait economic cooperation framework agreement (ECFA), some local and foreign machinery manufacturers have boosted their production on the island. ECFA provides a new platform for foreign enterprises to enter the Chinese market through Taiwan as a gateway. The zero-tariffs for specific products under ECFA represent a strong incentive for foreign manufacturers to place more attention to the island as a springboard to China. However, Swiss products have also been facing severe competition from other nations, notably on higher prices. Suppliers from Japan, the US, Germany, Taiwan and Korea are the five most important competitors in local market. Swiss machinery happens to compete with competitors at up to 60 % higher prices levels, enabling them to gain a bigger market share. Swiss companies find it increasingly difficult to ask for higher prices of their machines as the technology gap between them and their main competitors is narrowing. For Taiwan customers, “innovation minded” criteria are still the most important factors when buying Swiss machineries. Factors such as “high technology and productivity” and “requiring accuracy and reliability” are also regarded as most important by Taiwan’s buyers.

MACHINERY INDUSTRY IN TAIWAN

18


4. Downstream industries’ development and market trend 4.1. SEMICONDUCTOR INDUSTRY Taiwan’s 2011 IC output value reached NT$1,562.7 billion, 11.7 % less than in 2010. Memory manufacturers’ sales dropped the most, 32.5 % less than in 2010, because supply exceeded demand in the worldwide DRAM market and prices dropped below costs. In 2012, the IC output values reached NT$1,664.4 billion, 6.5 % more than in 2011. Taiwan’s 2013 IC output values are expected to grow 10.6 %, and 2014 IC output values are expected to grow 5.7 %. Graphic 7. IC output value

(NT$ 100 million) 25'000

50.0% 38.3%

19'445

20'000 17'693

16'644

18'253

40.0% 30.0%

15'627 15'000

20.0% 6.5%

10'000

5.7% 10.0% 0.6% 0.0%

-11.7% 5'000

-10.0%

0

-20.0% 2010

2011

2012(e) 2013(f)

Production value

2014(f)

Growth rate

Source of data: IEK, ITRI

Since global economic depression occurred by the global financial crisis, local IC packaging & testing industry output value reached NT$390.4 billion, down 5.9 % in 2012. Nevertheless, IC packaging & testing industry’s performance was better than the overall IC industry. Looking forward, the global economy is likely to grow in the second quarter of 2013, and the island’s packaging industry is likely to benefit from IDM outsourcing and high-scale packaging services. Graphic 8. IC packaging & testing industry’s output value

(NT$ 100 million) 6'000

35.0% 31.1%

5'065

5'000 4'148 4'000

3'904

4'197

4'704

25.0% 20.0%

12.1%

3'000

7.5%

15.0% 7.7%

2'000

10.0% 5.0%

-5.9%

1'000

0.0% -5.0%

0

-10.0% 2010

2011

2012(e)

2013(f)

Production value Growth rate Source of data: IEK, ITRI

MACHINERY INDUSTRY IN TAIWAN

19

30.0%

2014(f)


Table 10. Major indexes of Taiwan’s IC packaging & testing industry

2008 37 3,500 -0.9% 55.2% 1 1,799 51.4% 756 21.6% 3,297 91 2.6% 90,081 389

Number of manufacturers Output value (NT$ 100 million) Output value growth rate (%) Rank (worldwide market share) Rank (rank in the world) Added value (NT$ 100 million) Added value rate (%) Capital expenditures (NT$ 100 million) Capital expenditures/output value (%) Number of R&D staffs (person) R&D expenditures (NT$ 100 million) R&D expenditures/output value (%) Number of employees (person) Output value per employee (NT$ million)

2009 37 3,164 -9.6% 55.8% 1 1,621 51.2% 421 13.3% 3,258 89 2.8% 83,531 379

2010 37 4,148 31.1% 53.0% 1 2,111 50.9% 933 22.5% 3,796 108 2.6% 93,972 441

2011 37 3,904 -5.9% 53.5% 1 1,878 48.1% 847 21.7% 3,755 113 2.9% 91,520 427

2012 35 4,197 7.5% 56.6% 1 2,203 52.5% 869 20.7% 3,850 126 3.0% 92,300 455

Source of data: IEK, ITRI

In 2012, Taiwan IC packaging & testing industry’s output value accounted for 50 % of worldwide output value, allowing Taiwan to be the leader of sector, followed by the US and Singapore. In the future, no one is likely to replace Taiwan’s position. IC packaging & testing industry is considered a manufacturing industry and entails huge capital expenditures. Because of economic growth slowed down, capital investments were conservative. All major packaging & testing corporations reduced capital expenditures. In 2012, Taiwan packaging & testing manufacturers’ capital expenditures reached only NT$ 87 billion (+2.6 %).

4.2. PRINTED CIRCUIT BOARD INDUSTRY In 2011, Taiwan’s PCB industry grew sluggishly because the worldwide economic recession. The PCB industry advanced 2.6 % and output value amounted to NT$401.1 billion. Since global economy remained at slow pace in 2012, intelligent mobile phones, tablet PC, and ultrabook, which require PCB as main component, showed little growth. Therefore, domestic PCB industry presented a slight increase of 3.73 % in 2012 and product value reached NT$416 billion. The industry is expected to continue its growth but slow because of the bottleneck faced by electronic products’ growth. Therefore, Taiwan’s PCB industry may rise 3.72 % in 2013, and 3.82 % in 2014. Graphic 9. Printed circuit board market size

(NT$ million) 460'000 450'000 440'000 430'000 420'000 410'000 400'000 390'000 380'000 370'000 360'000

447'990

38.1%

40.0% 431'510

35.0% 30.0%

416'050

25.0% 401'100

20.0%

390'790

15.0% 2.6%

3.7%

3.7%

10.0% 3.8%

5.0% 0.0%

2010

2011

Source of data: IEK, ITRI

MACHINERY INDUSTRY IN TAIWAN

20

45.0%

2012(e) 2013(f) Production value Growth rate

2014(f)


4.3. PANEL DISPLAY INDUSTRY Graphic 10. Large TFT LCD market size and trend

(US$ million) 40'000 35'000 30'000

30.6%

31'856

30'205

34'363

35'322

40.0% 30.0%

24.3%

25'621

20.0%

25'000 7.9%

20'000

2.8%

15'000

10.0% 0.0%

10'000

-15.2%

-10.0%

5'000 0

-20.0% 2010

2011

2012(e) 2013(f) Production value Growth rate

2014(f)

Source of data: IEK, ITRI

After financial crisis occurred in 2008, end-users’ demands remained weak. Consequently, the country’s panel industry had a hard time in expanding the market. In 2011, Japan’s earthquake and European debt issues beat the worldwide TFT LCD market once again, forcing all panel manufacturers to cut down their capital expenditures and adjust their production capacities before the economic recovery. As a result, Taiwan’s large TFT LCD output value dropped to US$25,621 million in 2011 (-15.2 %). To survive, panel manufacturers formulated new strategies, and started to identify new markets and upgrade their products. Manufacturers focused on the intelligent mobile phones and tablets so that major manufacturers such as AUO, CMI, CPT, and Hannstar changed their 5-generation production process to manufacture small & medium size products. Since the increasing demands from end-users, local small & medium TFT LCD market size rose 15.8 % to reach US$6.98 billion in 2012. Major product line includes mobile phones, tablet PC, hand-held display, and car display. However, large panels remained weak. Graphic 11. Small & medium size TFT LCD market size and trend

(NT$ million) 9'000 8'000 7'000 6'000 5'000 4'000 3'000 2'000 1'000 0

19.5% 5'884 4'738

6'984

7'717

8'334

25.0% 20.0%

15.8%

15.0% 9.5%

7.4% 10.0%

4.4% 5.0% 0.0% 2010

2011

2012(e)

2013(f)

2014(f)

Production value Growth rate Source of data: IEK, ITRI

Small & medium size panel refers to 10-inch TFT LCD or smaller. The small & medium panels fitted with touch control feature have attracted users’ attention and thus increase profits for manufacturers. Facing the issues of unsteady LCD cycle, huge investment, and low gross profits, panel manufacturers continue to study the products with high added-value. Naturally, new products panel manufacturers are competing in this new market. Therefore, small & medium size panels became the target to the 1-generation and 2-generation panel factories.

MACHINERY INDUSTRY IN TAIWAN

21


The year of 2011 marked a milestone for the transformation of small & medium size panel production line. Currently, panel manufacturers are using 7~8 generation production lines to produce large size LCD and using 6-generation production line or lower production lines to produce small & medium size panels. Meanwhile, touch control panels are becoming more popular. All manufacturers are planning to produce huge quantity of new products efficiently and add high values to their new products to increase their revenues. Now, manufacturers specialized in small & medium size panels are focusing on panels with touch control feature.

4.4. GREEN ENERGY INDUSTRY The value of local solar photoelectric industry reached NT$131 billion in 2012, -20 %, caused by the decreased subsidies, excessive supply, and collapsed price. Battery was the major sub-industry, accounting for 66.3 % of output value, followed by 22.2 % of silicon wafer, 7.3 % of solar photoelectric module, and 2.8 % of system manufacturers. At the moment, Taiwan silicon waster industry occupies 8.5 % of worldwide production, solar battery industry comprises 15.7 %, and module industry 2.6 %. Presently, Taiwan’s solar batteries are very competitive in the world market. In 2012, Europe remained the major market although the European market continues to grow slowly. China, the US, Japan, and India markets grew substantially. However, demand was unable to catch up with the excessive production and the decreased subsidies by European nations. Therefore, demand fell although prices have dropped to an unprecedented level. The output value decreased slightly in 2012 and is expected to grow steadily with the industry’s cost advantages in 2013. Graphic 12. Solar photoelectric industry’s development and market trend

(NT$ million) 250'000 206'200 200'000 164'000 150'000

130'500

145'000

155'000

100'000 50'000 0 2010

2011

2012(e)

2013(f)

2014(f)

Source of data: IEK, ITRI

LED component prices slumped throughout the whole year because of excessive production and oversupply. Faced with the tough business environment, manufacturers had a hard time running their businesses. With a slow recovery of global economy, local LED component output value grew steadily and amounted to NT$89.2 billion (+8 %) in 2012.

MACHINERY INDUSTRY IN TAIWAN

22


Graphic 13. LED component industry’s development and market trend

(NT$ million) 120'000 100'000

90'424 82'625

89'235

95'920

102'344

80'000 60'000 40'000 20'000 0 2010

2011

2012(e)

2013(f)

2014(f)

Source of data: IEK, ITRI

4.5. 3C INDUSTRY Table 11. 3C industry’s development and market trend

Million units Shipments/Industries PC

2011 56.7

2012 57.5

2013 57.4

NB

173.3

191.9

220.5

Mother Board (MB)

120.2

119.0

118.5

Mobile phone

90.4

102.6

112.9

Digital camera

61.8

57.1

59.5

LCD Monitor

115.8

115.7

115.0

MACHINERY INDUSTRY IN TAIWAN

23

Trend In 2011, shipments grew 3.8 % only due to Sandy Bridge chip design defects. In 2012, shipments grew 1.4 % because the newly developed markets’ demands increased slightly. In 2011, shipments grew 13.3 % because of economic downturn and decreased demands worldwide. Ultra-thin NB is becoming more popular than ever. Shipments grew 10.7 % in 2012. In 2011, Taiwan’s MB shipments grew 7.6 %, better than the whole industry’s performance. Market demands of MB decreased in 2012, while other countries’ manufacturers were penetrating into the market. Consequently, shipments decreased 1 %. In 2011, Taiwan brand intelligent mobile phones were accepted by consumers and thus shipments grew 25.9 %. In 2012, the lowprice intelligent mobile phone OEM purchase orders increased steadily. As a result, shipments grew 13.6 %. In 2011, low-scale OEM purchase orders grew steadily so the growth rate reached 0.7 %, better than the worldwide growth rate of -2.3 %. In 2012, manufacturers were unable to receive high-scale DSC (exchangeable lens) purchase orders, so the shipments decreased 7.6 %, much lower than the worldwide growth rate of 4.0 %. In 2011, commercial models and newly developed markets’ growth rates weren’t


LCD TV

47.9

58.2

65.4

satisfactory. Coupled with the downturn of European market and the US market, -1.0 %. In 2012, thanks to the growth of emerging markets, shipments decreased less than expected. In 2011, the US and Europe economy remained weak and market saturated. Shipments grew 6.7 % only. In 2012, LCD TV shipments rose 21.5 % due to increasing demands by local and European markets.

Source of data: IEK, ITRI Graphic 14. PC shipment and growth

(million units) 58 57.5 57 56.5 56 55.5 55 54.5 54 53.5 53

57.5 18.4%

20.0% 57.4

56.7 56.5

15.0% 10.0%

54.6

5.0% 3.8%

0.0%

1.4% -0.2%

2010

2011

2012(e)

2013(f)

-1.6%

-5.0%

2014(f)

Shipment Source of data: IEK, ITRI

Companies did not buy as many new PCs to replace old PCs as expected, while demands from students are unable to increase revenues substantially. Moreover, Intel’s new products did not dominate the market. PC shipments are expected to fall in 2013 and 2014. Graphic 15. NB shipment and growth

(million units) 300

25.0% 249.9

250 21.9% 200 150

191.9

173.3

20.0%

220.5

15.0%

152.9 14.9%

13.3%

100

13.3% 10.0%

10.7%

5.0%

50 0

0.0% 2010

2011

2012(e)

2013(f)

2014(f)

Shipment Growth rate Source of data: IEK, ITRI

OEM manufacturers received ultrabook purchase orders. Taiwan’s NB industry is growing steadily. As compared to previous years, growth rate decreases due to economic downturn. Saturated markets are unlikely to grow. Recently, manufacturers are developing new markets. However, foreign competitors are penetrating into the NB market at the same time and threatening Taiwan’s NB industry.

MACHINERY INDUSTRY IN TAIWAN

24


Graphic 16. MB shipment and growth

(million units) 122

10.0% 120.2

120

119

118.5

117.5

118 114 112

6.0%

7.6%

116

8.0%

4.7% 111.7

4.0% 2.0%

110 0.0%

108 -1.0%

106 2010

2011

2012(e) Shipment Growth rate

-0.4%

2013(f)

-0.8% -2.0% 2014(f)

Source of data: IEK, ITRI

With a leading position, local MB manufacturers are flexible when they make decision between costs and profits. In China, MB manufacturers know the market, culture, and consumers’ preference better than anyone else. Therefore, Chinese MB manufacturers are considered as the major challengers for Taiwan’s MB manufacturers. Graphic 17. Mobile phone shipment and growth

(million units) 140

30.0% 25.9%

122.5

120

80 60

112.9

102.6

100

25.0%

90.4

20.0%

71.8

13.6%

15.0% 10.3%

13.8%

10.0%

40 3.5%

20 0

5.0% 0.0%

2010

2011

2012(e)

Shipment

2013(f)

2014(f)

Growth rate

Source of data: IEK, ITRI

Demands from the US and European markets for Taiwan-brand intelligent mobile phones are increasing steadily and have thus triggered shipments to grow rapidly. Major foreign mobile phone brands are interested in the potential of low-priced mobile phone in Asian markets, and favor Taiwan’s OEM manufacturers for production. Originally, local OEM manufacturers focused on feature-type mobile phones, but now, they focus on low-scale intelligent mobile phones.

MACHINERY INDUSTRY IN TAIWAN

25


Graphic 18. Digital camera shipment and growth

(million units) 63 62 61 60 59 58 57 56 55 54

30.0%

61.8

61.4

61.6

25.0% 20.0%

23.5%

59.5

15.0% 10.0%

57.1

5.0% 4.2%

3.5%

0.7%

-5.0% -7.6%

2010

2011

0.0%

2012(e)

-10.0%

2013(f)

2014(f)

Shipment Source of data: IEK, ITRI

Since exchangeable lens have been integrated into low-priced mobile phones and meanwhile exchangeable lens’ prices have dropped significantly, DSC OEM purchase orders are more likely to be transferred to Taiwan’s manufacturers. Low-scale DSC is forecast to lose its popularity in the market after the intelligent mobile phones’ snapshot features are upgraded. Graphic 19. Taiwan’s LCD monitor shipment and growth

(million units) 117.5

6% 117

5%

117 116.5

5.2%

4% 3%

116

115.7

115.8

2%

115.5 115

115

114.8

1% 0%

-0.1%

114.5 -1.0%

114 2010

2011

-0.5%

2012(e) 2013(f) Shipment Growth rate

-0.2% -1% -2% 2014(f)

Source of data: IEK, ITRI

Most products are fitted with medium or low scale LCD monitors. Manufacturers reduce prices to attract consumers’ attention in the newly developed market. Hand-held produces, such as able PC and NB, are replacing PC. The industry has matured and thus market growth starts to slow down. Most OEM manufacturers are under cost pressure.

MACHINERY INDUSTRY IN TAIWAN

26


Graphic 20. LCD TV shipment and growth

(million units) 80 70

71.2%

44.9

80% 70%

58.2

60 50

73.5

65.4

60%

47.9

50%

40

40%

30

30%

21.5%

20 10

6.7%

0 2010

2011

2012(e)

Shipment

12.3% 2013(f)

20% 10% 12.4% 0% 2014(f)

Growth rate

Source of data: IEK, ITRI

Faced with Korean manufacturers’ fierce competition, Japan’s manufacturers have lost their competitive edge and thus transfer OEM purchase orders to Taiwan’s manufacturers. LCD TV market has matured. It is unlikely to see 2-digit growth rate in this market. The US market and European market comprise 50 % and 20 % of Taiwan’s shipments, respectively. Both markets are not expected to recover in the coming future.

MACHINERY INDUSTRY IN TAIWAN

27


5. Machine tool industry 5.1. INDUSTRY OVERVIEW In Taiwan, most machine tool manufacturers are small & medium businesses. According to the Taiwan Association of Machinery Industry (TAMI), there are 1,487 manufacturers in Taiwan. In 2012, the production value of machine tool industry reached NT$164 billion and profit ratio reached 8 %, with employees about 30,000 and salaries of NT$14.57 billion. Annual revenue created per person reached NT$5.2 million. 115 machine tool manufacturers are engaged in R&D with the expenditures of NT$1.365 billion. Manufacturers have spent NT$31 million to buy technologies. The country’s machine tool industry is export-oriented. 75% of machine tools are exported. Taiwan is the world’s 4th largest exporting nation. China became the biggest export market for Taiwan’s machine tool industry. Thanks to the ECFA signed between Taiwan and China, and Europe’s and the US’s increasing demand, Taiwan’s machine tool export value remained worldwide the 4th largest in 2012. Major markets include automobile/motorcycle, molds, marine transportation, and 3C industry.

5.2. INDUSTRIAL DEVELOPMENT AND TREND Industrial development The island has built up its machine tool industry over a period of more than four decades. Long-term investment by Taiwanese firms in the development of key machine tool parts and components have successfully boosted the industry's performance and technological expertise. Further, local manufacturers that in the past chiefly supplied domestic machine assembly companies have been successful in developing international markets. The government's large-scale support of the sector along with the steady effort of companies has helped domestic machinery industry to accumulate notable capabilities in R&D, manufacturing and marketing. The local machine tool industry has also helped fuel growth of other sectors, particularly the ICT and consumer electronics industries. For example, the machine tool industry recently began developing high-speed cutting machines needed for the production of 3C molds and aluminum and magnesium alloy parts. By further boosting its technological level, the machine tool sector was able to provide the necessary support to other relevant industries including the bicycle, aerospace, green energy, medical equipment, and precision mold industries. Industrial structure Worldwide machine tool industry has developed for decades. Japan, Germany, and China represent more than 50 % of the share in global machine tool market. Most precision machine tools are manufactured by Japan and Germany. Taiwan supplies 5 ~ 6 % of machine tools in the world. Korea has the same market share as Taiwan. Italy and China are major competitors for Taiwan. The island’s products compete against Japanese and German technology at the higher price levels, and face low price competition from China at the lower end of the market. In response to these challenges, local machine tool firms are continually evaluating market needs, using product differentiation strategies and developing products that fit market niches. Taiwan’s machine tool manufacturers have established a self-sufficient cluster in Taichung area – from ball screw production to machine tool assembly. Now, Taiwan is the 3rd largest ball screw exporter of the world. Taiwan’s general processing-machine output value has reached NT$60 billion and thus Taiwan is a major supplier of general processing-machines of the world. Taiwan-made general processing-machines are exported to China, the US, and Turkey. However, Taiwan’s machine tool industry still lacks the capability to produce closed-type CNC controllers; feed shaft and server system remain to be upgraded. 5-year production statistics (including domestic and overseas) In 2011, machine tool output value reached NT$ 164.2 billion (+24.6 %). The demand of machine tools continued to grow from 2010. Then, the European debt issues occurred in the second half of 2011. As a result, the entire European market was exposed to the risks arising from the unsolved debt issues. US government implemented an economic revival plan and Congress passed

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the ceiling of debts. Meanwhile, US manufacturing industries were restructured. Nevertheless, the US market remained inactive in the second half of 2011. Therefore, Europe and US markets are unlikely to grow and, to the worse extent, Europe and US markets are most likely to grow slower than Asian market. In 2012, local machine tool output value reached 164.2 billion with an annual growth rate 1 %. China has started to optimize its import structure and thus concentrate on equipments with high value-added and high technological capabilities. It is, therefore, very important to watch closely the products distributed by Europe, US, and Japan in the China market as well as their sales strategies, such as “high-scale models sold at low prices” and “highly priced models”. In 2012, the output value of Taiwan-made machines sold in China accounted for 25 % of machinery product exports. Moreover, it is important to note that China is likely to tighten its market demands and will hamper exports of Taiwan-made machine tools severely. Furthermore, Korea has signed FTAs with the US and with Europe. Thus, Korea’s manufacturers benefit from duty-free business when exporting machinery equipment to Europe and the US. Taiwan exports US$4 billion – 5 billion worth of machinery equipments to Europe and USA each year, including US$800 million worth of machine tools. Europe and USA impose import tariffs of 2 – 5%, which means Taiwan will be asked to cut 2 – 5 % of price to offset import tariffs when exporting to Europe and the US. Apparently, Korea’s FTA has a significant impact on the island’s machine tool exports. Graphic 21. Taiwan-made machine tool market (including domestic and overseas markets)

(NT$ million) 85.53% 164'210 164'247 166'583 168'919 90% 160'000 80% 131'807 140'000 70% 180'000

120'000

60%

100'000

50%

80'000

24.58%

60'000

40% 30%

40'000

20%

20'000

0.02% 1.42% 1.40% 10% 0% 2011 2012(e) 2013(f) 2014(f) Production value Growth rate

0 2010

Source of data: IEK, ITRI

Industrial cluster In Taiwan, the machine tool industry originated in Taichung. Li Wei, founded in 1980, was the first Taiwan machine tool manufacturer implementing a labor-division strategy and thus integrated satellite factories to process machine tools. That was how an industrial cluster was created in Taichung. Later on, a labor-division network was created in Taichung; forging, sheet metal, heat-processing, grinding, polishing, coating, assembly, tests, and sales were handled by center factory and satellite factories. Meanwhile, a backup system was established in Taichung to facilitate the labor-division between various factories. The center factory and satellite factories are close to each other. Thus, transaction costs are minimized and all factories can learn from each other and transfer techniques easily. Most importantly, the industrial cluster allows customers to purchase products at one stop without traveling long distance to visit different factories. According to the Machine Tool & Component Manufacturer Association, there are at least 1,500 machine tool & component factories in Taiwan, plus countless small processing factories. Machine tool comprises a number of components, such as base, workbench, transmission, feed, spindle, control, lubrication, and cooling modules. Taiwan’s machine tool industrial chain has developed a comprehensive value chain comprising R&D and design, component processing & manufacturing, whole machine assembly, tests, and sales. In general, Taiwan’s machine tool industry has established a comprehensive labor-division network and thus maintains its competitive edge in the international market. Nonetheless, its tool industry has to upgrade sales services and improve CNC controller’s performance in order to upgrade its competitiveness to a higher level. Currently, complete system plants are outsourced to other manufacturers to produce components in order to cut down their costs. As a result, a number of module factories are growing rapidly in recent years. Their scales and revenue have reached the same level as the complete system plants.

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The industrial cluster is beneficial to innovation and technological expansion. Public R&D institutes moved to Taichung one after another. The government plays an important role for central Taiwan’s industrial innovations. With government’s support, R&D institutes have executed a number of R&D plans, and meanwhile, served as the bridge between industries and academic research institutes and have thus trained a number of researchers as well as new businesses. In general, central Taiwan’s machine tool cluster has a high level of entrepreneurial spirit. New businesses are established one after another by experienced employees. However, the cluster lacks the know-how to develop revolutionary technologies. It is difficult for central Taiwan’s industrial cluster to attract venture capital industry. Therefore, manufacturers have to raise fund on their own for their businesses. Graphic 22. Industrial cluster of machine tool

 A unique and complete supply chain  Customers are able to get any parts of a machine within a 60 km radius  The production of Taiwan’s machine tool is effective, cost saving and able to maintain a good quality/price ratio. Challenges to cluster development Taichung cluster faces a number of issues such as: (1) low level of product differentiation, low grade of products, and South Korea and China’s price competition; (2) dependence on import of key components such as controller, bearings, and bearing. Technical know-how remains to be upgraded. (3) the great majority of manufacturers are small & medium businesses, short of innovation, R&D, and system integration capabilities; (4) low level of mutual dependence between component manufacturers and complete system plants, weakening the efficiency of CSD system; (5) manufacturers are moving to foreign countries. A number of complete system plants and component manufacturers have transferred the cluster know-how to China; (6) machine tools are considered traditional industry. College graduates are unwilling to join the machine tool industry. This industry lacks R&D staffs and technicians, especially electric & mechanical integration, value-added software design, and fundamental technology staffs; (7) machine tools are distributed through agents. It is, therefore, difficult to provide customers with highly value-added system; and (8) Taiwanese manufacturers are returning to Taiwan from China and meanwhile other manufacturers are expanding their factories. As a result, land prices are soaring. Subcontractors’ skills are indispensable for Taichung’s machine tool cluster. However, small-sized manufacturers lack R&D capabilities. Consequently, the cluster has a hard time upgrading technological know-how. Secondly, Taiwan focuses on general processing-machines that require a low level of technological know-how. The dependence on low level of technological know-how obstructs technological advancement. Now, China has begun to imitate Taiwan’s machine tool clusters. Meanwhile, many Taiwanese subcontractors have set up factories in China and have thus reduced their dependence on the complete system plants in Taichung. These moves are weakening the cluster’s labor-division network. Therefore, how to help subcontractors upgrade their technological capabilities and how to create competitive edge for the parent factories remain the most important tasks for Taichung’s industrial cluster.

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6. Hi-tech equipment industry 6.1. SEMICONDUCTOR-MANUFACTURING EQUIPMENT INDUSTRY Industry overview Semiconductor technologies were brought to Taiwan in 1974. UMC established the first 4-inch Fab in 1980. Later on, TSMC and VIS were founded. Since then, Taiwan manufacturers have become the leading chop OEM manufacturers of the world. In Taiwan, semiconductor industry is the first industry having output value more than NT$1 trillion. The semiconductor industry has made a remarkable contribution to Taiwan’s economic growth. Taiwan-made IC chops are needed everywhere nowadays. Semiconductor production entails huge capital and latest technologies. Manufacturers compete with each other fiercely. In the past, semiconductor industry integrated the manufacturing sector and packaging & testing sector. Now, this industry is integrating the equipments and materials, especially the manufacturing equipments. When the industry started, companies focused on only production. Foreign manufacturers controlled the process technologies. Consequently, local manufacturers earned OEM profits only. Currently, domestic manufacturers have begun to integrate process equipments into their production lines and have thus controlled the most critical manufacturing technologies. On the island, there are approximately 30 semiconductor process equipment manufacturers. Manufacturers employ 5,000 staffs/workers. R&D expenditures constitute 7.4 % of revenue. The three major manufacturers (including OEM) account for 47 % of the industry’s output value. Major products include thin-film deposition apparatus, dry-etching equipment, and chemical/mechanical drilling equipment, as well as wet process cleaning equipments and measurement/testing equipments. Most products are sold to Taiwan’s semiconductor manufacturers and packaging & testing manufacturers. Industrial development and trend Taiwan’s semiconductor industry adopted packaging & testing technologies in 1966 and has thus begun to grow. In 1980, UMC established the first 4-inch Fab in Taiwan. Meanwhile, machinery manufacturers started to exchange the technologies related to packaging/testing and equipments with semiconductor manufacturers. In 1987, TSMC established the first 6-inch Fab in Taiwan and has thus shaped an OEM model since then. In the early 1990s, Taiwan’s semiconductor manufacturers established 6-inch Fabs one after another. In 1994, VIS set up the first 8-inch Fab in Taiwan. Meanwhile, manufacturers began to switch from parts cleaning & repair and packaging equipment online control to precision packaging & testing equipments and certifications. In 2000, Promos and VIS focused on DRAM and OEM. The semiconductor equipment industry began to switch to process equipments. After UMC established the first 12-inch Fab and SoC Alliance was founded in 2000, IC industry switched to chip design. Meanwhile, manufacturers started R&D and began to produce semiconductor-manufacturing equipments. At this time, Taiwan’s semiconductor industry has developed a comprehensive industrial chain. Despite its long history of semiconductor manufacturing industry, local equipment manufacturers still lack the technologies required by process equipments and are, therefore, not ready to manufacture process equipments yet. Nonetheless, the equipment manufacturers can supply a portion of wet process equipment, packaging equipment, and measurement equipment using their own technologies. The country’s manufacturers produce highly technical equipment in the capacity of OEM manufacturers for foreign manufacturers. In general, the semiconductor equipment industrial chain is pretty much selfsufficient. 5-year production statistics (including overseas and domestic markets) In 2010, domestic semiconductor equipment’s output value reached NT$ 40.7 billion, +130 %, because of the recovery of the worldwide economy after the financial crisis. In 2011, hand-held intelligent devices and tablet PC sales grew dramatically, the demands of processors, memories, and chips grew substantially so that semiconductor manufacturers expanded their production capacities, triggering the demands of semiconductor process equipments to grow. Local semiconductor equipment’s output value reached NT$ 46.5 billion, +14.23 %.

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In 2012, European economy remained inactive and domestic semiconductor manufacturers took a conservative stance in the market. Moreover, high-scale process equipments were not the major concern to local equipment manufacturers. Taiwan semiconductor’s output value dropped to NT$38.1 billion, -18.05 %. Looking forward, Taiwan’s equipment manufacturers are expected to start producing TSV process-related equipments, and the output value is likely to reach NT$ 40.6 billion, +6.42 % in 2013. Graphic 23. Semiconductor-manufacturing equipment market (including overseas & domestic markets) trend

(NT$ million) 50'000 45'000 40'000 35'000 30'000 25'000 20'000 15'000 10'000 5'000 0

130.48% 46'588 40'783

140% 38'178

40'630

42'113

120% 100% 80% 60% 40%

14.23%

6.42% -18.05%

3.65% 20% 0% -20% -40%

2010

2011

2012(e) 2013(f) Market value Growth rate

2014(f)

Source of data: IEK, ITRI

Industrial cluster Most of Taiwan’s semiconductor equipment manufacturers are located in northern Taiwan including 25 manufacturers, about 70 % of all manufacturers. There are 6 factories (20 % of total manufacturers) in southern Taiwan, while 4 companies (10 % of total) are located in central island. Northern Taiwan’s manufacturers are specialized in expansion equipments, inspection equipments, and packaging & testing equipments. Years ago, some manufacturers acted as agents or OEM manufacturers for foreign manufacturers and have thus learned the related technologies in deposition equipments, photo-resist equipments, exposure & developing equipments, and dry-etching equipments. Since those equipments are higher than other process equipments, northern Taiwan manufacturers’ output values amounted to NT$ 40.9 billion, constituting 88 % of the industry’s total output value. In central Taiwan, despite the absence of panel-manufacturing industrial cluster, equipment-manufacturing factories and R&D facilities have been set up here for a long time. Presently, central Taiwan manufacturers’ output value reaches NT$3.72 billion, accounting for 8 % of the industry’s total output value. The production value of companies in southern Taiwan reaches NT$1.86 billion with only 4 % of total.

6.2. PANEL DISPLAY PRODUCTION-EQUIPMENT MANUFACTURING-INDUSTRY Industry overview Taiwan has progressively developed the panel display industry in the last decade or so. All sizes of panel display, such as mobile phone screen, computer screen, and TC panels, are everywhere in daily lives. Panel production entails huge capital and precision technologies. Therefore, integration is an important topic for this industry. In the past, upstream manufacturers, midstream manufacturers, and downstream manufacturers were integrated. At present, manufacturers have moved one step further to integrate equipments and materials. Currently, Samsung and LG are the world’s top two panel manufacturers. Faced with fierce competition and decreased profits, both manufacturers are switching to vertical integration in order to minimize production costs and meanwhile control technologies. Apparently, process equipments are becoming more and more important for the next-generation display-manufacturing industry. Taiwan’s panel industry started from panel production. Later on, manufacturers switched to integrate materials and equipments. Now, Taiwan’s manufacturers focus on the less complicated equipment and are unable to produce process equipment. Korea is self-sufficient in terms of process equipment. Therefore, Taiwan relies on Japan, Europe, and US for the critical process equipment.

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In Taiwan, there are approximately 200 display-process equipment manufacturers in Taiwan with employees of 29,817. Their R&D expenditures comprise approximately 7.1 % of their sales. The top three manufacturers contribute approximately 35 % of this industry’s total output value. Major products include inspection equipments and automation equipments. Most customers are panel manufacturers in Taiwan; most products are sold in Taiwan, too. In recent years, however, Taiwan’s panel manufacturers moved their module factories to China and have sold their machines and equipments to China; some production-equipment manufacturers set up factories in China to sell production-equipments to Chinese manufacturers directly. Industrial development and trend The panel display-production manufacturers have established a cluster as time passed by. In the beginning, Taiwanese acted as agents that imported Japan’s machines for sale and provided maintenance services. Later on, they switched to manufacturing modules and automated machines that required low level of technologies. At that time, Taiwan’s manufacturers lacked the technologies to produce Array and Cell process equipments. The manufacturers acted as either agents or OEM manufacturers for Japan’s manufacturers and have thus acquired technologies from Japan via technical transfer. Presently, local manufacturers have developed their R&D capabilities and are capable of producing upstream production equipments, midstream equipments, and downstream equipments that are required by domestic manufacturers of panel display production. There are 60 manufacturers specialized in upstream process equipments; 55 manufacturers are involved in midstream process equipments. Manufacturers focus on the less complicated process equipments, such as cleaning equipments, inspection equipments, and automatic shipment equipments. They are short of the precision technologies and, therefore, have to import exposure equipments, developing equipments, and dry-etching equipments from Japan. In recent years, however, local panel process equipment manufacturers’ revenue has decreased due to economic downturns. The LCD manufacturing-equipment manufacturers are planning to develop the precision process equipment, such as oxide transistors, touch-control screen-manufacturing equipments, and organic light-emitting diodes (AMOLED) displaymanufacturing equipment, allowing panel manufacturers to upgrade their process technologies and manufacture products in the island without importing from foreign countries. 5-year production statistics (including overseas and domestic markets) In 2010, thanks to the economic revival after the worldwide financial crisis, the display-manufacturing equipment industry’s output value reached NT$ 58.7 billion (+121 %). In 2011, it was unlikely to grow significantly. Nevertheless, intelligent handheld devices and tablet PC market continued to grow. Thus, the small & medium panel production line’s production capacities grew moderately. As the result, annual LCD-manufacturing equipment industry’ output value reached NT$ 64.3 billion (+9.6 %). For 2012, European economic growth remained uncertain and Taiwan’s panel manufacturers were conservative in the market. LCD output value dropped to NT$46.9 billion (-27.17 %) because Europe, USA, and Chinas’ markets are unable to grow as expected. In 2013, some panel manufacturers are likely to produce organic light-emitting diodes (AMOLED) displays using LCD production lines. The equipment industry’s output value is likely to reach NT$ 47.7 billion (+1.80 %).

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Graphic 24. Panel display production-equipment market trend

(NT$ million) 70'000 60'000 50'000

140.00% 120.00% 47'696 49'436 100.00% 46'855 80.00% 60.00% 40.00% 9.62% 1.80% 3.65% 20.00% 0.00% -27.17% -20.00% -40.00% 2011 2012(e) 2013(f) 2014(f) Market value Growth rate

121.11%64'336 58'687

40'000 30'000 20'000 10'000 0 2010 Source of data: IEK, ITRI

Industrial cluster Most panel display production-equipment manufacturers are located in northern Taiwan, serving the display manufacturers in northern Taiwan. An industrial cluster was created in this area. Plus equipments and critical component manufacturers, there are approximately 100 manufacturers, consisting 50 % of total manufacturers across the island. Northern Taiwan has most manufacturers specialized in modules and automation, followed by southern Taiwan. A number of southern area’s manufacturers were machinery manufacturers years ago. They switched to manufacturing panel display productionequipments for the panel manufacturers located in Tainan Science-based Industrial Park. A number of manufacturers provide modules and automation equipments for the upstream, midstream, and downstream process equipments. In central island, manufacturers produced machinery equipment at beginning, and later on, they started to manufacture panel production-equipments. Nevertheless, machinery industry remains the major industry in central Taiwan. Therefore, the major manufacturers chose not to move out of central Taiwan. There are approximately 40 manufacturers in central Taiwan; about 20 % of local manufacturers are there, specialized in Array, Module, and automation process. Just a few manufacturers are specialized in the equipment required by Cell process. The output value of manufacturers in northern area reaches approximately NT$46.5 billion, accounting for 68.4 % of total industrial output value. There is no panel-manufacturing factory in central Taiwan and thus there is no cluster effect in central Taiwan. Nevertheless, equipment manufacturers set up their R&D facilities in central Taiwan long time ago. Therefore, central Taiwan manufacturers’ output value reaches approximately NT$13.6 billion, comprising 20.1 % of total output value. There are a number of manufacturers in southern part. However, they are unable to compete with companies in northern and central areas in terms of prices and shipments. In short, southern Taiwan manufacturers’ output value reaches NT$7.7 billion, accounting for 11.5 % of total output.

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7. Robot industry 7.1. INDUSTRY OVERVIEW Robots are designed to complete tasks in dangerous, dirty, hard, and monotonous workplaces. There are many types of robots: unitary axial robots, Cartesian coordinate robots, SCARA robots, parallel-structured robots, and multi-joint robots. Robot comprises following critical modules: 1. mechanism module such as coupler/gear, bearing, linear slide/screw, end effectors; 2. control module such as PC-based, PLC, industrial computers; 3. driving module such as motor, decelerator, and driver; and 4. sensor modules such as vision sensor, distance sensor, kinetic sensor, and other sensors. On the island, most robot-related manufacturers are located in northern Taiwan and central Taiwan. Most robots are manufactured by automatic component factories, system factories, machinery factories or agent. Local manufacturers are capable of producing unitary axial robots and vertical coordinate robots, and have to rely on foreign countries for higher-scale robots. A few manufacturers and research institutes have begun to develop high-scale robots. However, Taiwan has to import critical components (e.g. server motor, controller, decelerators) from foreign countries. Thus, production costs become too high. To the worse extent, domestic users are reluctant to use Taiwan-made robots that have not been proven successful yet. Therefore, local robot manufacturers prefer to act as agents to distribute imported robots.

7.2. INDUSTRIAL DEVELOPMENT AND TREND Industrial development The automation industry has gone through three phases: low-cost automation, production automation, and industrial automation. In the low-cost automation phase (before 1982), domestic complete system plants and critical component factories started to manufacturer industrial robots. In the production automation phase (1983 ~ 1989), the government implemented automation-related policies. Meanwhile, automation manufacturers were founded one after another. In industrial automation phase I (1990 ~ 1999), labors’ awareness grew dramatically and meanwhile labor shortage worsened. As a result, many automation manufacturers were established. In industrial automation phase II (2000 ~ 2011), China’s labor issues drew manufacturers’ attention and thus manufacturers understood the importance of automation once again. Most local manufacturers are capable of developing and manufacturing automation equipments with proven export records. Industrial structure Most manufacturers in the country act as importing agents for foreign-brand robots; a handful of manufacturers focus on unitary axial robots or Cartesian coordinate robots, SCARA robots, and parallel-structured robots; few manufacturers are involved in multi-joint robots. Research institutes are, therefore, expected to design and develop multi-joint robots for industrial use. Locally, a handful of manufacturers are capable of controlling and executing the motions of mechanism modules, control modules, driving modules, and sensor modules that are required by the simple-type industrial robots. The manufacturers are capable of producing most critical components, such as linear slides, lead screws, end effectors, PC-based, PLC, industrial computers, motors, decelerators, drivers, and various sensors. However, domestic manufacturers lack the know-how needed for controllability, product precision, and durability. Therefore, they have to import components. 5-year production statistics (including overseas and domestic markets) In 2010, Taiwan needed 3,290 robots. In 2011, 4,000 robots are required (+22 %). Quantities increased to 4.280 in 2012, 4,580 in 2013, and 4,900 in 2014. The annual growth rate reached 7 %. Take the 3,290 robots required in 2010 for example, most robots were used by clean rooms (33 %), followed by shipment operations (30 %) and welding (18 %). Most robots were used for substrate or semiconductor processing and shipment. Presently, robots are being used by various industries, such as automobile-manufacturing industry and critical component-welding.

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Graphic 25. Industrial robot market demand

6'000 5'000

4'280

4'000 4'000

4'580

4'900

3'290

3'000

Units

2'000 1'000 0 2010

2011

2012(f) 2013(f) 2014(f)

Source of data: IEK, ITRI

Local manufacturers have made an outstanding development record of unitary axial robots and Cartesian coordinate robots. In 2010, Taiwan exported 25,335 robots, amounting to NT$1.759 billion; China was the biggest buyer with 11,363 robots (45% of Taiwan’s export). Hong Kong bought 2,437 robots (10% of total exports). In 2011, however, exports dropped to 18,011 robots. Surprisingly, exports rose to NT$ 2.31 billion. Apparently, unit prices grew sharply. In 2012-2014, robot growth is expected to grow continually. In 2014, 21,451 robots are expected to be exported at an amount of NT$ 2.749 billion. Graphic 26. Industrial robot annual export (value & quantity)

(NT$ 1,000) 3'000'000

30'000 2'748'935 2'446'543 2'593'335 2'500'000 25'000 2'308'059 20'237 21'451 18'011 19'092 2'000'000 1'758'607 20'000 25'335

1'500'000

15'000

1'000'000

10'000

500'000

5'000

0

0 2010

2011

2012(f) 2013(f) 2014(f) Export value Export units

Source of data: IEK, ITRI

In 2010, Taiwan imported 2,906 robots, amounting to NT$ 5.219 billion. Japan, the most important sourcing nation, sold 1,886 robots to Taiwan (65 % of total imports), much more than others. In 2011, imports grew to 3,895 robots, but the amount dropped to NT$3.312 billion. Electronic/Electric & Mechanical industries require small & medium size robots. In 2012 ~ 2014, exports are expected to grow continuously. 4,639 robots are expected to be exported in 2014 and amounting to NT$3.944 billion.

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Graphic 27. Industrial robot’s annual import (value & quantity)

(NT$ 1,000) 6'000'000

5'000 4'639 4'500 4'000 4'129 4'376 3'895 3'944'298 3'500 3'510'411 3'721'036 3'000 3'311'709 2'906 2'500 2'000 1'500 1'000 500 0 2010 2011 2012(f) 2013(f) 2014(f) Import value

5'219'397 5'000'000 4'000'000 3'000'000 2'000'000 1'000'000 0

Source of data: IEK, ITRI

In northern Taiwan, manufacturers focus on the critical components that are required by robot industrial chains, such as industrial computers, motors, and sensors. Most manufacturers are well established with sufficient operation funds. In central island, manufacturers have developed a comprehensive supply chain and focus on unitary axial robots and Cartesian coordinate robots, and are capable of exporting robots to overseas markets, especially China. In southern area, plastic machinery manufacturers especially need robots. A handful of machine tool manufacturers have developed the technical knowhow for this newly developed business opportunity. With its comprehensive supply chain and sufficient machinery/electric & mechanical/electric control manpower, central Taiwan is the most important region in Taiwan in terms of machinery industry development. Central Taiwan’s infrastructure is the most important asset for robot industry development with respect to robot-related technologies and system services. Industrial robot factories can provide unitary machines to help machine tools and plastic machines to upgrade product’s added-value. For example, industrial robots are valuable tools for material shipment and pick-and-place, allowing factories to manufacture products faster than ever and meanwhile avoid all possible negligence and dangers. Moreover, industrial robots are indispensable tools for automating production units and production lines. Government and manufacturers have to allocate more resources for R&D in order to minimize costs and increase profits for local component production, such as server motors, controllers, and decelerators. Thus, the nation does not have to rely on foreign countries for the critical components and thereby supply industrial robots at lower prices.

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8. Mechanical critical components 8.1. INDUSTRY OVERVIEW There are four ball screw manufacturers, including HIWIN Technologies, Taiwan Ball Screw Industry, PMI Precision Motion Industries, Inc., and Lu Tin Technology. Four manufacturers control more than 90 % of the industry’s total output value and are specialized in transmission components, such as ball/roller screws, and linear slides. Their average gross margin rate reaches 30 %. Their R&D costs represent 5~10% of their sales revenues. According to the manufacturers, Taiwan had to purchase the raw materials of ball screw from foreign countries years ago. Now, China Steel Corporation provides 60 ~ 70% of raw materials that are needed by local manufacturers for producing medical equipments, semiconductors, 3C products, automation products, green products, and precision machine tools. Most Taiwanese ball screw manufacturers were reluctant to release their sales figures publicly, so that ball screw’s output values were estimated. Domestic ball screw industry’s output value was estimated NT$6.873 billion in 2010, and NT$8.061 in 2011, +17.28 %. Table 12. Ball screw industry’s output values in recent years

Unit: NT$ million Year 2007 2008 2009 2010 2011 2012(e) 2013(f)

Net value 5,505.1 5,669.0 2,696.7 6,873.5 8,061.1 7,656.0 8,287.7

Growth rate --2.98% -52.43% 154.89% 17.28% -5.03% 8.25%

2014(f)

8,919.3

7.62%

Source of data: IEK, ITRI

8.2. IMPORT/EXPORT ANALYSIS Taiwan ball screw industry’s import/export grew in the last 5 years, except 2009 due to the international financial crisis. In 2010, the growth rate reached 161.39 % and export amounted to NT$3.24 billion. In 2011, the growth rate reached 41.86 % with exports amounting to NT$4.59 billion. In 2007 and 2008, Taiwan’s ball screw imports were around NT$ 4.3 billion. In 2009, import dropped to NT$ 0.19 billion, -56.17 % due to the international financial crisis. Then, imports reached NT$0.66 billion, +246.31 % in 2010 after the international financial crisis ended. In 2011, imports grew 16.62 %, amounting to NT$0.77 billion. Table 13. Ball screw imports & exports

Unit: NT$ 1,000 Year 2007 2008 2009 2010 2011

Export Dollar amount 2,134,872 2,308,653 1,238,010 3,236,047 4,590,794

Growth rate --8.14% -46.38% 161.39% 41.86%

Source of data: ROC Customs import/export database: ITRI

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Import Dollar amount 440,829 434,595 190,472 659,626 769,241

Growth rate ---1.41% -56.17% 246.31% 16.62%

Surplus (deficit) Dollar amount 1,694,043 1,874,058 1,047,538 2,576,421 3,821,553


9. Outlook of Machinery Industry Taiwan major machinery industries’ outlooks are summarized as follows: Overall machinery industries Machine tools, industrial machinery, and hi-tech equipments are major export items. Taiwan’s machine tool exports to China remain unchanged or decreases slightly in 2013, but products from Japan and Germany to China are expected to increase. Since imports of high-scale machine tools to China are entitled to a tax exemption, Taiwan is not able to enjoy the benefit due to its exports of medium-scale machine tools only. Now, local manufacturers are eager to push the government to consolidate resources in cooperation with manufacturers in order to upgrade machine tool industry’s capacity and thereby upgrade the industry’s competitive edge. The country’s machine tools are mainly for the production of molds and electronic products. Because the output of electronic industry fell dramatically in 2012, local machine tools industry was also suffered. However, machine tools in Japan and Germany are mainly for the manufacture of aviation and automobile products so that both nations’ exports continue to grow. To local companies, hi-tech has to be integrated into production processes and thereby upgrade the quality of machine tools. It is important for domestic manufacturers to develop multiple purpose machine tools for different types of industries, such as automobile industry; one must not rely on electronic industry forever. Machine tool industry Manufacturers are switching to flexible production, multiple axial, intelligence, and multiple applications. Machine tool manufacturers are using more and more electronic production machines. For example, manufacturers produce 3C products using drilling center, and produce touch-control panel using glass processing machines. Hi-tech equipment industry Presently, domestic manufacturers focus on non-critical process equipments. They are planning to manufacture the components required by critical equipments and to improve system integration capabilities. Manufacturers in the downstream segment are also required to upgrade their equipment-manufacturing capability, such as LED and solar energy and touchcontrol equipments. Industrial robots Industrial robot technological capabilities tremendously fall behind Japan, the US, and Europe. The companies should switch to single machine automation at this moment, and then expand to production units and production lines step by step. A number of ICT corporations have established their markets for their industrial robots. Critical components A number of critical components are very competitive in the international market, such as ball screws and linear slides. In the future, manufacturers should focus on new applications, such as MRT automatic door opening/closing transmission devices. Ball screw manufacturers are developing products with emphasis on high bearing force, high efficiency, dustproof, compact size, and silence. Source of data: IEK, ITRI

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10. Appendix 10.1. MACHINERY RELATED TRADE FAIRS Taipei International Machine Tool Show, TIMTOS: www.timtos.com.tw Taipei Manufacturing Technology Show, MTduo: www.mtduo.com.tw Taiwan International Machine Tool Show, TMTS: www.tmts.tw Taipei International Plastics & Rubber Industry Show, TAIPEI PLAS: www.taipeiplas.com.tw Taipei International Packaging Industry Show, TAIPEI PACK: www.taipeipack.com.tw Taipei International Mold & Die Industry Fair: www.odm-dmi.com Taipei International Industrial Automation Exhibition: www.autotaiwan.com.tw Taipei International Food Processing & Pharm. Machinery Show: www.foodtech.com.tw Taiwan International Textile & Garment Machinery Exhibition:www.chanchao.com.tw

10.2. ASSOCIATIONS AND OTHER SOURCES Industrial Associations Taiwan Association of Machinery Industry: http://www.tami.org.tw Taiwan Machine Tool Foundation: www.tmtf.org.tw Taiwan Machine Tool & Accessory Builders’ Association: www.tmba.org.tw Precision Machinery Development Association of ROC: www.cmd.org.tw Taiwan Mold & Die Industry Association: www.tmdia.org.tw Taiwan Fluid Power Association: www.tfpa.org.tw Taiwan Semiconductor Industry Association: www.tsia.org.tw Taiwan Electronic Equipment Industry Association: www.teeia.org.tw Taiwan Electrical & Electronic Manufacturers’ Association: http://www.teema.org.tw Photonics Industry & Technology Development Association: http://www.pida.org.tw Taiwan Automation Intelligence and Robotics Association: www.tairoa.org.tw Trade Organizations Taiwan External Trade Development Council (TAITRA): http://www.taitra.org.tw Importers & Exporters Association of Taipei: http://www.ieatpe.org.tw Chinese International Economic Cooperation Association: http://www.cieca.org.tw Chinese National Association of Industry and Commerce, Taiwan: http://www.cnaic.org Taiwan Chamber of Commerce: http://www.tcoc.org.tw Trade Office of Swiss Industries (TOSI): www.swiss.org.tw R&D Centers Precision Machinery Research Development Center: www.pmc.org.tw Industrial Technology Research Institute: http://www.itri.org.tw/eng/ Industry & Technology Intelligence Services: http://www.itis.org.tw Institute for Information Industry: http://www.iii.org.tw Government Agencies for Machinery Industry Ministry of Economic Affairs (MOEA): www.moea.gov.tw Industrial Development Bureau, MOEA: www.moeaidb.gov.tw Committee for Precision Machinery Industry Development, MOEA: www.moeamid.org.tw Machinery Companies in Taiwan For detailed information refer to: www.tami.org/product-new.php?on=1

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10.3. CUSTOM TARIFFS Table 14. Custom tariffs for selected machinery products for Swiss exports

In case of 4 digit HS code with many subcategories, the lowest and highest tariff rates are included. HS code 8402 8403 8404 8405

8406 8407 8408 8409 8410 8411 8412 8413 8414

8415 8416 8417 8418

8419

8420 8421 8422

8423 8424 8425

Description Steam or other vapour generating boilers; super-heated water boilers Central heating boilers other than those of heading 84.02 Auxiliary plant for use with boilers of heading 84.02 or 84.03; condensers for steam orother vapour power units Producer gas or water gas generators, with or without theirpurifiers; acetylene gas generators and similar waterprocess gas generators, with or without their purifiers Steam turbines and other vapour turbines Spark-ignition reciprocating or rotary internal combustionpiston engines Compression-ignition internal combustion piston engines (diesel or semi-diesel engines) Parts suitable for use solely or principally with theengines of heading 84.07 or 84.08 Hydraulic turbines, water wheels, and regulators therefor Turbo-jets, turbo-propellers and other gas turbines Other engines and motors Pumps for liquids, whether or not fitted with a measuringdevice; liquid elevators Air or vacuum pumps, air or other gas compressors and fans;ventilating or recycling hoods incorporating a fan,whetheror not fitted with filter Air conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity Furnace burners for liquid fuel, for pulverised solid fuelor for gas; mechanical stokers Industrial or laboratory furnaces and ovens, includingincinerators, nonelectric Refrigerators, freezers and other refrigerating or freezingequipment, electric or other; heat pumps other than airconditioning machines of heading 84.15 Machinery, plant or laboratory equipment, whether or notelectrically heated, for the treatment of materials by aprocess involving a change of temperature Calendering or other rolling machines, other than for metals or glass, and cylinders therefor Centrifuges, including centrifugal dryers; filtering orpurifying machinery and apparatus, for liquids or gases Dish washing machines; machinery for cleaning or dryingbottles or other containers; machinery for filling, closing, sealing or labelling bottles, cans, boxes, bags orother containers Weighing machinery, including weight operated counting orchecking machines; weighing machine weights of all kinds Mechanical appliances for projecting, dispersing or spraying liquids or powders Pulley tackle and hoists other than skip hoists

MACHINERY INDUSTRY IN TAIWAN

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Custom tariff (%) 3/5 3/4 3 3/4

3/5 0 / 17.5 2.5 / 12.5 0 / 15 3/6 0 / 6.8 5 / 10 3 / 12.5 2.5 / 5

1.5 / 10 3/4 3/4 0 / 15

0/4

4 3 / 10 2.5 / 6.5

3.4 2.5 / 5 0


8426 8427 8428 8429

8430

8431 8432 8433

8434 8435 8436

8437 8438 8439 8440 8441 8442

8443 8444 8445

8446 8447

8448 8449 8450 8451

Ships' derricks; cranes, including cable cranes; mobilelifting frames, straddle carriers and works trucks fittedwith a crane Fork-lift trucks; other works trucks fitted with lifting orhandling equipment Other lifting, handling, loading or unloading machinery Self-propelled bulldozers, angledozers, graders, levellers,scrapers, mechanical shovels, excavators, shovel loaders, tamping machines and road rollers Other moving, grading, levelling, scraping, excavating,tamping, compacting, extracting or boring machinery, forearth, minerals or ores; pile-drivers and pile-extractors;snow-ploughs and show-blowers Parts suitable for use solely or principally with themachinery of headings 84.25 to 84.30 Agricultural, horticultural or forestry machinery for soilpreparation or cultivation; lawn or sports-ground rollers Harvesting or threshing machinery, including straw or fodder balers; grass or hay mowers; machines for cleaning,cleaning, sorting or grading eggs, fruit or otheragricultural produce, other than machi Milking machines and dairy machinery Presses, crushers and similar machinery used in themanufacture of wine, cider, fruit juices or similarbeverages Other agricultural, horticultural, forestry, poultry-keeping or beekeeping machinery, including germination plantfitted with mechanical or thermal equipment; poultryincubators and brooders Machines for cleaning, sorting or grading seed, grain ordried leguminous vegetables Machinery for the industrial preparation or manufacture food or drink Machinery for making pulp of fibrous cellulosic material orfor making or finishing paper or paperboard Book-binding machinery, including book-sewing machines Other machinery for making up paper pulp, paper orpaperboard, including cutting machines of all kinds Machinery, apparatus and equipment (other than themachine-tools of headings 84.56 to 84.65) for preparing or making plates, cylinders or other printing components; plates, cylinders and other printing Printing machinery used for printing by means of plates, cylinders and other printing components of heading Machines for extruding, drawing, texturing or cuttingman-made textile materials Machines for preparing textile fibres; spinning, doubling or twisting machines and other machinery for producing textile yarns; textile reeling or winding Weaving machines (looms) Knitting machines, stitch-bonding machines and machines formaking gimped yarn, tulle, lace, embroidery, trimmings,braid or net and machines for tufting Auxiliary machinery for use with machines Machinery for the manufacture or finishing of felt ornonwovens in the piece or in shapes Household or laundry-type washing machines, including machines which both wash and dry Machinery for washing, cleaning, wringing, drying, ironing, pressing,

MACHINERY INDUSTRY IN TAIWAN

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0 5 / 10 0 0

0

0 / 3.5 0 0

0 2.5 / 4 2.5 / 4

2.5 / 4 2.5 / 3 2.5 / 4 2.5 2.5 / 4 0/4

0/4 3 2

2/3 3

2.3 / 4 3/5 3 / 10 2.5 / 10


8452 8453

8454 8455 8456

8457 8458 8459

8460

8461

8462

8463 8464 8465

8466 8467 8468

8469 8470

8471

8472 8473 8474

bleaching, dyeing, dressing, finishing, coating or impregnating Sewing machines, furniture, bases and covers specially designed forsewing machines; sewing machine needles Machinery for preparing, tanning or working hides, skins orleather or for making or repairing footwear or other rticles of hides, skins or leather, other than sewing machines Converters, ladles, ingot moulds and casting machines, of akind used in metallurgy or in metal foundries Metal-rolling mills and rolls therefor Machine-tools for working any material by removal of material, by laser or other light or photon beam,ultrasonic, electro-discharge, electro-chemical, electronbeam, ionic-beam or plasma arc processes Machining centres, unit construction machines (singlestation) and multi-station transfer machines, for workingmetal Lathes for removing metal Machine-tools (including way-type unit head machines) fordrilling, boring, milling, threading or tapping by removingmetal, other than lathes Machine-tools for deburring, sharpening, grinding, honing, lapping, polishing or otherwise finishing metal, or cermetsby means of grinding stones, abrasives or polishing products, other than gear cutti Machine-tools for planing, shaping, slotting, broaching, gear cutting, gear grinding or gear finishing, sawing, cutting-off and other machinetools working by removingmetal, or cermets Machine-tools (including presses) for working metal byforging, hammering or die-stamping; machine-tools (including presses) for working metal by bending, folding, straightening, flattening, shearing, Other machine-tools for working metal, or cermets, without removing material Machine-tools for working stone, ceramics, concrete, asbestos-cement or like mineral materials or forcold-working glass Machine-tools (including machines for nailing, stapling, glueing or otherwise assembling) for working wood, cork, bone, hard rubber, hard plastics or similar hard materials Parts and accessories suitable for use solely, including work or tool holders, self-opening dieheads, dividing headsand other special attach Tools for working in the hand, pneumatic hydraulic or withselfcontained electric or non-electric motor Machinery and apparatus for soldering, brazing or welding, whether or not capable of cutting; gas-operated surface tempering machines andappliances Typewriters; word-processing machines Calculating machines and pocket-size data recording, reproducing and displaying machines with calculating functions accounting machines, postage-franking machine sticket-issuing machines Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data nto data media in coded form and machines for processing such data Other office machines Parts and accessories suitable for use solely Machinery for sorting, screening, separating, washing, crushing, grinding, mixing or kneading earth, stone, or other mineral substances,

MACHINERY INDUSTRY IN TAIWAN

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2/5 2.5 / 4

2.5 / 4 2.5 / 4 4/6

4/6 4/6 4/6

4/6

3/4

3/5

3.5 / 4 3/4 3/4

2.5 2.5 / 5 2.5 / 5

0 0

0

0 / 3.5 0 / 2.5 0


8475

8476 8477 8478 8479 8480

8481

8482 8483

8484

8486

8487 9024 9025 9026 9027 9030 9031 9032

in solid form Machines for assembling electric or electronic lamps, tubesor valves or flash-bulbs, in glass envelopes; machines form anufacturing or got working glass or glassware Automatic goods-vending machines, including money-changing machines Machinery for working rubber or plastics or for the manufacture of products from these materials Machinery for preparing or making up tobacco Machines and mechanical appliances having individual functions Moulding boxes for metal foundry; mould bases; moulding patterns; moulds for metal, metal carbides, glass, mineral materials, rubber or plastics Taps, cocks, valves and similar appliances for pipes, boiler shells, tanks, vats or the like, including pressure-reducing valves and thermostatically controlledvalves Ball or roller bearings Transmission shafts and cranks; bearing housings and plain shaft bearings; gears and gearing; ball or roller screw; gear boxes and other speed changers Gaskets and similar joints of metal sheeting combined with Gaskets and similar joints of metal sheeting combined with other material or of two or more layers of metal Machines and apparatus of a kind used solely or principally for the manufacture of semiconductor boules or wafers, semiconductor devices, electronic integrated circuits orflat panel displays Machinery parts, not containing electrical connectors, insulators, coils, contacts or other electrical features Machines and appliances for testing the hardness, strength, compressibility, elasticity or other mechanical properties Hydrometers and similar floating instruments Instruments and apparatus for measuring or checking the flow, level, pressure, or other variables of liquids or gases Instruments and apparatus for physical or chemical analysis Oscilloscopes, spectrum analysers and other instruments for measuring electrical quantities Measuring or checking instruments, appliances and machines, not specified Automatic regulating or controlling instruments

3/4

0 / 10 2.5 / 3 4 0/4 2.5 / 4

0/5

1 / 10 2.5 / 15

4/5

0

0 / 15 0 0 0 0 0/3 0 0 / 10

Source of data: Customs Administration, Ministry of Finance

For additional customs tariff information please check at http://eweb.customs.gov.tw/RateWebEn/Search1.aspx

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ExportHelp www.switzerland-ge.com/exporthelp exporthelp@switzerland-ge.com T 0844 811 812

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