April 6, 2024 reading assignment: The Industrial Heritage of Taiwan

The Start of Taiwan's IC (integrated circuit) Industry

On the cold morning of February 7, 1974, an unusual breakfast gathering took place in a Chinese breakfast shop called "Siao-Xin-Xin Soy Milk Shop" in Taipei.

At the round table were Sun Yun-suan (Minister of Economic Affairs), Gao Yu-shu (Minister of Transport), Wang Chao-chen (Dean of Industrial Technology Research Institute), Kang Bao-haung (Dean of Graduate Institute of Telecommunications), Fei Hua (The Executive Yuan Secretary-General), Fang Xien-chi (Secretary General of Telecommunications) and Pan Wen-yuan.

These seven people mapped out the development of Taiwan's electronics industry over a breakfast table.

The time was 1971, the year that the Republic of China withdrew from the United Nations and the Senkaku Islands event occurred.

In 1972, the Republic of China broke off relations with Japan, and in 1973, the global oil crisis caused surging oil prices. The diplomatic frustration and inflation brought economic depression to Taiwan.

At the time, Taiwan's economic development had already taken off, although domestic income was still low.

In order to boost the morale of the people, Premier Chiang Ching-kuo, who just assumed the office of the Executive Yuan, decided to implement the Ten Major Infrastructure Projects.

He asked Secretary General Fei Hua to decide on a critical project in the field of science and technology. Therefore, Fei gathered Fang Xien-chi and Pan Wen-yuan to discuss the project.

The three of them had reached some consensus in developing the electronics industry in Taiwan but did not know how to start.

The project came in time as a great opportunity; therefore, after spending a few weeks in field inspection in Taiwan, Pan unfolded the big plan on the breakfast table.

In Pan Wen-yuan's opinion, the growth of Taiwan's electronics industry was quite slow at that time, for factories were small and lacked opportunities to cooperate with each other.

The government should replace labor-intensive industries with technology-intensive industries.

By making investments in human resources and infusing capital, the government could advance the growth of industries.

He recommended developing integrated circuits because it would create the greatest added-value for Taiwan's electronics industries in the future.

The report caught the participants' eyes. "How long will it take for the technology to become mature in Taiwan?" asked Minister Sun. "Four years," Pan Wen-yuan answered. "How much will it cost?" Minister Sun continued.

Pan thought for some time, held up one finger and said, "Ten million US dollars." That was equal to 400 million NT dollars, which was a huge amount of money at the time. However, Minister Sun nodded discreetly and said, "OK!"

Thus, an influential policy was decided, and the seed of Taiwan's technology industries was planted during the breakfast meeting.

Soon after the gathering, in that same year, Fang Xien-chi and Wang Chao-chen proceeded to establish an electronic watch R&D (research and development) team.

In July, Pan Wen-yuan began to write the "Draft Plan ofIC Development Proposal", which was completed at 11 a.m. on July 26th and was immediately submitted to Minister Sun.

A project meeting was held three hours later and the proposal was approved right away.

On September 1st, the Research & Development Center of Electronics Industries, under the Industrial Technology Research Institute, was established based on the proposal.

Pan Wen-yuan also recruited a group of overseas scholars and formed TAC, Technical Advisory Committee, in the United States.

TAC engaged in offering advice about the required technology for the development as well as introducing partners in technology transfer.

Subsequently, a group of engineers was able to receive training in RCA, and they later devoted themselves to the industry.

It was very clear that the Taiwanese Government endeavored to develop the IC industry with strong motivation and boldness. It is an important historical event in the development of Taiwan technology industries.

Although the dream of "making Taiwan the kingdom of electronic watches" did not come true, Taiwan indeed achieved theobjective to produce IC components at a low price but in high quality.

Note 1: Dr. Pan Wen-yuan is seen as the "Father of Taiwan's IC Industry".

He never received any education or wages in Taiwan, nor did he settle down in Taiwan.

However, his patriotic enthusiasm led him to travel between America and Taiwan quite often so that the IC industry could take root in Taiwan.

To know more about Dr. Pan, please read the book entitled The Story of Taiwan's Semiconductor Industry.

IC = integrated circuit; R&D = research and development; TAC = technical advisory committee.

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