chapter  3
21 Pages

Leading, Following, or Cooked Goose? Explaining Innovation Successes and Failures in Taiwan’s Electronics Industry

ByDouglas B. Fuller, Akintunde I. Akinwande, Charles G. Sodini

Comparing Taiwanese efforts in CMOS logic, DRAM, and AMLCD technologies, this chapter argues that Taiwanese firms have succeeded in becoming globally recognized innovators in CMOS logic, are emerging as classic followers in AMLCDs, and are in a precarious position in the DRAM segment, a potential cooked goose. What has differentiated the successful case of innovation in CMOS logic from the other two examples? The Taiwanese were able to take advantage of the technological trends in this segment to create a whole new business model, one suitably adapted to emerging technological trends and to the characteristics of Taiwan’s own industrial structure. Necessary, but not sufficient, factors to account for Taiwanese firms’ success in innovation in CMOS include an influx of Taiwanese returnees from the United States, the state’s role in actively training personnel for the industry, the state’s role as capitalist for the principal Taiwanese ventures in this field, and creation of the necessary infrastructure for the industry by both state and private actors (Hong 1997, Hsu 1997, Mathews and Cho 2000). Conversely, why do Taiwanese DRAM firms face such a precarious future? Principally, the Taiwanese economic structure is ill suited to meet the scale requirements needed in this segment. The general lesson to be drawn from these case studies is that Taiwan can be successful in certain product segments. First, we will take a detailed look at how each case matches up against the determining product characteristics. Then, we will discuss how the Taiwanese economy supports and facilitates firms making products with the requisite characteristics and punishes those making products without these characteristics.