Technology transfers from Taiwan to China
Thirty years ago, China had nothing. How did China become an economic and technological superpower in a mere thirty years? Why can't other countries perform the same magic? What happened?
Part of the story is the massive technology transfer from Taiwan to China.
In my previous posts, I've already mentioned that former TSMC employees form the core of the management and technology for China's premier semiconductor company SMIC. There are many more examples of Taiwanese know-how landing in China.
In this post, I will highlight the transfer of Taiwanese LED technology to China.
Also, I will discuss Taiwanese-American Steve Chen's supercomputing expertise and his company Galactic Computing in Shenzhen.
If you look hard enough, you should also be able to find a history of linkages between Taiwan's and China's machine tool industries. Taiwan has numerous patents in the machine tool industry and it is world famous. It is more than a mere coincidence that China has developed a strong machine tool industry as well.
Taiwan is full of technology and Taiwanese/Taiwanese-Americans have been transferring an unknown amount of technology to China. Taiwanese "millionaire job hoppers" (see citation below) have massively upgraded China's technology in important sectors.
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http://english.cw.com.tw/print.do?action=print&id=11097
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Playing at the Big Table
By Hsiao-Wen Wang
Published:CommonWealth Magazine June 11, 2009 (No.423)
Epistar, Taiwan's largest manufacturer of light-emitting diodes (LEDs), has seen its share price rise far above its peers. Now it is boldly entering the advanced stage of competition, with its sights set on spearheading industry transition.
Epistar chairman Biing-jye Lee holds up a small AC LED light that can be directly plugged into a wall socket. Prospects for LEDs making inroads into home lighting applications seem as bright as the AC LED in Lee's hand.
In Taiwan's LED industry tales abound of millionaire job hoppers, loyal to neither company nor technology, but only themselves, jumping ship to serve the highest bidder in China.
It is spring in the Hsinchu Science Park, home of Epistar. At the Epistar factory, atoms are activated inside a more than 1,000-degree Celsius reactor. In a process called epitaxy, layer after layer of atoms are deposited on a sapphire substrate until, after eight hours, a thin film of tens of thousands of layers has been grown. The result is epitaxial crystalline layers that are thinner than one seventy-thousandth of the diameter of a human hair.
When a 20-ampere current is sent through an epitaxial crystal the size of a grain of sand at the core of a wafer no bigger than a fingernail, it instantly emits a bright white light. Epitaxy involves complex materials, and each layer requires different parameters in terms of temperature, current, and quantity. If just one parameter per layer is wrong, product quality will be badly affected.
China, with its huge LED market, is very keen to get its hands on upstream technology and therefore does whatever it takes to poach Taiwanese engineers who specialize in epitaxy technology.
Few can resist, as China beckons with salaries of US$1 million for a two-year contract. Whoever manages to deliver an epitaxy growth formula and set the parameters for metalorganic chemical vapor deposition (MOCVD) machines within these two years can take his million home.
"The ones in China now are all engineers who were involved back when we were doing 40 lumens-per-watt LEDs," says Epistar chairman Biing-Jye Lee, without the slightest trace of concern. He is so confident because Epistar's leading technological edge is founded not only on the development of 100 lumens-per-watt LEDs, but also in the management technology that controls the entire production line.
"While LED fabs are small, they have as many work stations within the production process as semiconductor fabs. There are more than 10 production processes, with all the various work stations linked together – it takes an entire system, and an entire team," explains the still rather scholarly Lee, who used to do research at the Industrial Technology Research Institute (ITRI).
Founded 13 years ago, Epistar posted losses in its first six years. But today it epitomizes Taiwan's competitive edge in the upstream LED industry.
One Million LED Cameras on Hold
LED technology is constantly changing. As the theoretical value of luminescence efficiency can reach 300 lumens per watt, the leading LED makers around the world are throwing themselves into R&D, in an all-out rush to achieve higher efficiency.
"Wordwide we are only at 100 lumens per watt, so everyone is making progress," Lee muses. "We need to be fast enough. As soon as you slow down, the others will overtake you," he says in describing the current race for ever brighter LEDs. In this technological R&D competition, however, Epistar has already made it into the ranks of Olympic gold medal hopefuls.
Robert Yeh, chairman of Everlight Electronics, a major customer and shareholder of Epistar, predicts confidently that Epistar will be able to catch up to US-based Cree, which makes the LED with the world's highest luminescence efficiency, "within one year."
ITRI Electronics & Optoelectronics Research Laboratories general director Yi-jen Chan observes that Epistar is as important in the LED industry as chip foundries TSMC and UMC are in the semiconductor industry. "Epistar is the TSMC and UMC of the LED industry," Chan declares. "It is siphoning off Taiwan's best optoelectronics talent."
Just how indispensable are the crystallites that Epistar produces?
A few years ago Japanese electronics maker Sony designed a digital camera with a built-in distance meter that used an orange LED lamp for auto focus. Epistar ramped up production, but still could not keep up with spiraling demand. As a result, 1 million Sony digital cameras were stuck on the production line for want of LEDs.
When enraged Sony managers called supplier Epistar demanding prompt delivery, Epistar staff hurriedly packed 1 million orange LEDs into a suitcase and flew it to Japan on the next available flight, despite bad typhoon weather.
Epistar's strategy of focusing on upstream products has paid off, since it now enjoys the ripple effects of its dominant position in LED components. It should not come as a surprise that midstream LED makers such as LiteOn Technology, Everlight, and the UMC Group have all scrambled to get a major stake in Epistar.
Winning the Patent Wars
While Epistar is still very small in scale, it has secured itself a very distinct position.
Epistar is like a tiny yet feisty tropical fish, courageously taking on a group of crocodiles. With an annual turnover of around NT$10 billion Epistar is squaring off with multinational giants that are twenty times bigger, such as Philips of the Netherlands, GE of the United States, Osram of Germany, and Toyoda Gosei and Nichia from Japan. Against this backdrop Epistar is forced to focus on upstream technology. Struggling inside a patent net that the international giants have cast over the entire industry, Epistar seeks to flexibly pursue its technological autonomy by continuously investing in R&D and developing patents. To date, the company owns more than 1,000 patents.
At the end of May, Epistar won a partial victory in a patent infringement suit filed by Philips Lumileds. The U.S. Court of Appeals for the Federal Circuit vacated a Limited Exclusion Order issued by the International Trade Commission (ITC) that barred import into the United States of third-party products using Epistar devices. More importantly, it overturned an earlier ITC ruling that Epistar could not contest validity of a Philips Lumileds U.S. patent with respect to third party products.
When Lee joined Epistar 13 years ago, his mission was to transfer ITRI technology to the private sector, and he did not give much thought to other issues.
But now that Epistar has become the largest supplier worldwide of red and yellow LEDs, and even has succeeded in becoming a supplier for South Korean electronics giant Samsung, manufacturing blue LED backlights for LCD TVs, Lee has set his sights even higher. He not only wants Epistar to gain technological autonomy, but also to spearhead the next wave of industry transition.
The threshold for entering Taiwan's LED industry has been consistently rising. Today the LED industry is no longer a game that can be played with small capital. It is on the verge of becoming a highly cyclical industry involving massive investment and high risk.
The best case in point is Samsung, the foremost rival and cooperative partner of Taiwan's high-tech industry.
Internal Samsung forecasts anticipate that once shipments of LED-backlit LCD TVs reach 30 percent of overall shipments, the company will need 200 MOCVD machines to satisfy demand for epitaxy crystallites. Presently, not a single company in Taiwan is able to produce such quantities.
Across Taiwan there are only about 350 to 400 MOCVD machines, half of the world's total. Epistar alone has only 120 machines for white LEDs.
Therefore, Samsung will be forced to take action itself. But once Samsung decides to invest, it will have to devote as much as NT$30 billion.
"In the past you only needed NT$1 billion to open an LED factory. But the big companies around the globe kept growing bigger, and now if you want to get into the LED industry, you need NT$30 billion," Lee observes.
Therefore Epistar, which has a paid-in capital of just NT$28 billion, has decided to raise more funds. This time the company needs to raise NT$20 billion to finance mergers and acquisitions. Evidently, Epistar has already chosen to enter the LED industry's advanced competition of high risk and high investment, regardless of the toll that it may take on the company.
Ten years ago when Epistar was still operating in the red, it defined its mission with the following slogan: "Lighting up life with LEDs."
"A decade later we have not yet achieved that goal. Back then it seemed virtually impossible, but at least we put a dream out there," says Lee with a chuckle, adding, "Now we have a slight chance."
Translated from the Chinese by Susanne Ganz"
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There are many Taiwanese/Taiwanese-American engineers in China. China has been gorging on a buffet of Taiwanese experts in various scientific fields.
For example, supercomputer expert Steve Chen has been working in Shenzhen. His knowledge about supercomputers has been transferred to his Chinese employees. Hence, you will see a new crop of Chinese supercomputer experts that have built on their knowledge derived from Steve Chen.
Steve Chen (computer engineer) - Wikipedia, the free encyclopedia
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Steve Chen (Chinese: 陳世卿; pinyin: Chén Shìqīng) (born 1944 in Taiwan) is a computer engineer and pioneer. Chen is the founder and CEO of Galactic Computing, a developer of supercomputing blade systems, based in Shenzhen, China.
Chen holds a M.S. from Villanova University and a PhD from the University of Illinois at Urbana-Champaign [1]. He is best known as the principal designer of the Cray X-MP and Cray Y-MP multiprocessor supercomputers. Chen left Cray Research in 1987. With IBM's financial support, Chen founded Supercomputer Systems Incorporated in January 1988. SSI was devoted to development of the SS-1 supercomputer, which was nearly completed before the money ran out. The Eau Claire, Wisconsin-based company went bankrupt in 1993, leaving more than 300 employees jobless. An attempt to salvage the work was made by forming a new company, SuperComputer International (SCI), later that year. SCI was renamed Chen Systems in 1995. It was acquired by Sequent Computer Systems the following year.
John Markoff, a technology journalist, wrote in the New York Times that Chen was 'considered one of the nation's most brilliant supercomputer designers while working in this country for the technology pioneer Seymour Cray in the 1980s.'"
