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Professor Otto C C LinJune 2003

c:ppt/02_ShanghaiOct 1

National Innovation System and

the Role of National Institute

Prof Otto C C Lin

The Hong Kong University of Science & Technology

Clear Water Bay, Kowloon, Hong Kong

[email protected]

Tsing-Tech Innovations, Ltd

New World Centre, Tsim-sha-Tsui, Kowloon, Hong Kong

[email protected]

Six Countries Programme Conference, Canada

June 5-6, 2003
mailto:[email protected]:[email protected]


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Outline

- From science to industry: the myths

- The Innovation process and the players

- The national innovation system

- A case study of Taiwan:

- The roots of hi-tech industry

- The way forward


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Hi-Tech Industry

Technology

Science


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Hi-Tech Industry

National Vision

Strategy

Policy CommitmentR&D Funding

Taxation & Banking

Legal System

Regional Planning

Physical Infrastructure

Basic Sciences

Education & Skilled WorkforceEntrepreneurship

Venture Capital

Social Support

Project Management


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The Research to Commercialization Process

Research

Science

Applied

Research

Development

Industrial Technology

Mid-stream R&D

Product &

Process

Development

Pilot

Production &

Field Trial

Manufacturing

Commercialization

Basic

ResearchSales &

Services


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Mission

Jobs/Outputs

Criteria Success

Talents needed

Rewards system

Risk

Difference

Commercialization

Excellent People

Excellent Management

Research

Similarity


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Scientific

Research

Product

Commercialization

The Innovation Process: Creating Wealth from KnowledgeThe Innovation Process: Creating Wealth from Knowledge

Applied Research

Product Development

Process Development

Pilot Production

Technology Diffusion

Developing Industrial Technology

Policy / Planning / RD Funding

Taxation/Legal Systems

Infrastructure

Skilled Manpower

VC Funding / Entrepreneurship

Social Support and Stability

Nurturing Business Environment

f i


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Professor Otto C C Lin

March 2002

Developing Industrial Technology

National Innovation System: the Players

UNIVERSITYBUSINESS

INDUSTRY

INSTITUTE

GOVERNMENT

Nurturing Business Environment

P f Ott C C Li


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The National Innovation System: The Dynamics

ProductCommercialization

UNIVERSITY

GOVERNMENT

ScientificResearch

BUSINESS

INSTITUTE

TechnologyDevelopment

P f Ott C C Li


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National Innovation System: The Role of the Institute

UNIVERSITIES

Institute ??

INDUSTRIES

Business

Government

Pilot

Production

Product & Process

Development

Applied

Research

Technical

Services

Manufacturing

Industrial TechnologyBasic

Research

Focus

Funding



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National Innovation System: USA

Business

Government

Pilot

Production

Product & Process

Development

Applied

Research

Technical

Services

Manufacturing

Industrial TechnologyBasic

Research

UNIVERSITIES

NATIONAL INSTITUTESNATIONAL LABORATORIES

INDUSTRIES

Focus

Funding



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20

00

Year

PerCapitalGNP,

US$

The Economic Growth of Taiwan



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THE STRATEGY: A Case Study of Taiwan

A Developing Human Resources

B Acquiring Foreign Technologies

C Establishing Indigenous Technology Capability

E. Converting Science / Technology to Industry

Ref: O. C. C. Lin, in Behind East Asian Growth: the political and social

foundation of prosperity , Editor, H.S. Rowen. Rutledge, 1998



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June 2003


National Innovation System : Taiwan

Business

Government

Pilot

Production

Product & Process

Development

Applied

Research

Technical

Services

ManufacturingIndustrial TechnologyBasic

Research

SCIENCE-BASED INDUSTRIAL PARK

(Host for Hi-Tech Companies)

Focus

Funding

Industrial Technology Research Institute (ITRI)

AllINER, FIRDI, MIDC, CBD, III, TL, CPC

Aerospace

Pollution Control

Industrial Safety

Industrial Standards

Materials

Energy

Chemicals

Machinery

Micro-Electronics

Opto-Electronics

Computer &

Communications

ITRI

Academic

Sinica

Universities

Industrial Companies



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June 2003


Industrial Technology Research Institute (ITRI)

Founded in 1973

A statutory national institute established by law

A non-profit R&D corporation under the auspices of

the Ministry of Economic Affairs (MOEA)

The technical arm of the government s industrial

policies

A partner to local industries



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June 2003


ITRI Missions

To spearhead the development of high-

tech industry in Taiwan

To upgrade the competitiveness oftraditional industries in the global market

Professor Otto C C LinJ 2003


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June 2003


ITRI: Scope of R&D Activity

ELECTRONICS MATERIALS CHEMICALS

ENERGY & RESOURCES

MACHINERY

AEROSPACE

INDUSTRIAL

POLLUTION

CONTROL

INDUSTRIAL

SAFETY

& HEALTH

METROLOGY

OPTO-ELECTRONICS

COMPUTER &

COMMUNICATIONS

VLSI Fabrication IC Design Flat Planel Display

Microwave Technology Electronics Packaging

Material Design Material Application Material Reliability Improvement

New Material

Chemical Engineering Process Applied Chemistry Speciality Chemicals and Pharmaceuticals

Polymera and Fibers

Energy Conservation Systems Design Resource Application Environment Engineering

Automation Precision Machinery Power Machinery Precision Parts & Components

Quality Assurance Aviation System & Components Inspection/Testing Market & Technology

Information

Treatment & Control Waste Reduction &

Reuse

Pollutant Analysis &

Monitoring

Chemical AccidentPrevention

Industrial Hygiene Engineering Safety

National Measurement Standards Laboratory Accreditation

Industrial Quality Assurance &Service

Measurement Technology &

Instrumentation

Optical Information Electro-Optical Components & Materials Optical Components & Systems

Computer Communication Consumer Electronics ITRI

Professor Otto C C LinJ 2003


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June 2003


Impacts of ITRI Technology

I. Establishing New Technology / Industry

VLSI

Computing

Communication Materials

Sp. Chemicals

Automation

Opto-Electronics

IC: CMOS

DRAM/SRAM

PC Peripherals

Telecom, ISDN

PLC

Auto Engine ELE Components &

Parts



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June 2003


Taiwan IC Company Family Tree (Ref: Dr. F.C. Tseng, 2002)

1974 :Technology

Transfer

1980 : First IC Co.

UMC Team 3.5m , CMOS

IC Products

RCA ERSO/ITRI7m , CMOS

(3-inch Fab.)

TSMC

Team 2m , CMOS

6-inch Fab.

Winbond

Team 2m , CMOS

IC Products

1987 : First Foundry

1987 : First IDM

Vanguard

Team 0.5m , CMOS

8-inch Fab.SRAM/DRAM

Products

1994 :First DRAM

TI-AcerTIDRAM Tech.

IPR1992 :First JV DRAM



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June 2003


Source: ITIS/IEK, Nov-2001; SIA, Jan-2002

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

(e)

2002

(f)

LineChart:AnnualGrowthRat

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

BartChart:TaiwanIC

Revenue

Taiwan Product Production Value

Taiwan Growth Rate

Worldwide Growth Rate

$M USD

Taiwan IC Outperform WW IC



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June 2003


Confidential-Security C

March 2002

Trust The Leader. Trust TSMC. 23

Design Services

Fabless

IP

Assembly &

TestFoundry

Transaction

IP verifications

Design

Infrastructure

IP Integration

Flip Chip & CSP

Transactions and InterlinkageTransactions and Interlinkage



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June 2003


Foundry Business ModelFoundry Business Model

System

Design

IC Design

Foundry

Contract

Assembly

& Test

System

Design

IC Design

Fab

Assembly

& Test

Design

Services

Foundry

Assembly

& Test

IPIC

Design

IC

Design

IDM/ASICIDM/ASIC

Fabless Co. IDM/ASIC Fabless Co. System Co.

Before 1986 1990s After 2000

System

Design

System

Design

Assembly

& Test

FabFab

Assembly

& Test

System/IC

Design

IC Design



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June 2003


-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2001(e) 2002(f) 2003(f) 2004(f)

IC Testing

IC Package

IC Design

IC Fab

Outlook Taiwan IC IndustryOutlook Taiwan IC Industry

M US$

Source: ITIS/IEK, Mar-2002

23%

23%

36%

31%

15,558

18,056

25,332

34,7212001-2004 CAGR= 31%



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Fabless Industry GrowthFabless Industry Growth

Numerous Fabless Companies Were Formed Since 1987

Taiwan

From 10 to over 200

Many successful IPOs: VIA, Acer Lab, SIS, Realtek,

Sunplus etc.

US

Several hundreds

Many successful IPOs: Cirrus, Trident, ISSI, S3, nVidia,

ATI, Broadcom, Oak, ESS, C-Cube, Mosys, Altera,

PMC-Sierra etc. China

Emerging with more than 100 companies



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Taiwan IC Key Success Factors(Ref.Dr. F. C. Tseng, 2002)

1. Insightful Government Policies and Effective Execution

Industry Policies

Strategic Industries

ITRI

Financial Policies

Government VC arms

IPO for hi-tech companies

2. Successful Commercialization

. Tax shelters and RD incentives

Shielded from government bureaucracy

Science park



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Taiwan IC Key Success Factors

(Ref: Dr. F. C. Tseng, 2002)

3. Good Model of Innovation

Technology

Continued own development to be among the leaders

Business Model

Foundry/Fabless model

Human Resources

Many local universities and technical institutes.

Thorough training in fundamentals

Advanced degrees in US universities

RD/management experiences in leading SC companies



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Notebook PC Consortium

ITRI CCL

CCL

TEAM A

PARTNERS

Project Leaders

Motherboard (Hitran)

Components (King Tel)

EMI / Battery (Wiso)

Mechanical Design (Tek Star)

Software (Cal Roc)

Testing (CCL)

Reliability (CCL)

System Integration (CCL)

Promotion (TEAMA)

Project ManagementThe Team



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NOTEBOOK PC PRODUCTION

15543

19238

22262

14453

11807

8919

51614318

35472824

14661

11073

6088

46253781

2592129186149422

0

2500

5000

7500

10000

12500

15000

17500

20000

22500

25000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Year

SHIPMEN

T,

KPCS Worldwide

Taiwan

*

Reference: MIC / IDC

* Estimated for 2000



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CD-ROM/DVD-ROM Production Scale Forecast

World v.s. Taiwan

The Taiwanese forecast volume will reach 45 Million units, at 40% world market share


The Ind strial Strength


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The Industrial Strength



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Impacts of ITRI Technology

II. Upgrade Existing / Traditional Industry

Design Sporting: Bicycles, Tennis rackets, Golf clubs

Material Plated Plastics Manufacturing Machine Tools / Parts

Quality - EHS Fashion Fabrics

Pharmaceuticals

Green processes



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3



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3



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Composite Materials Technology

New

Product

CAD

Design

Polymer

Matrix

Fibre

Reinforcement

Metal

Parts

Materials

Joining

Processing

Fabrication Non-

DestructiveEvaluation

Performance

Testing



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ITRI: Characteristics of Projects

Specificity

Niche Advantage

Market Orientation

Economic Feasibility

Industry Participation

Transfer Mechanism

Championship



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ITRI: Technology Diffusion

Technology Licensing

Contract Services

Technology Spin-off

Strategic Alliances Workshops and Training Programs

Technical Publication



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ITRI: Technology Output

560548447381368NumberPatents Granted

28,00027,81126,25327,06120,177CompaniesGeneral Services to

Industry

957

69,000

1,050

340

510

1998

830

56,572

1,019

304

465

1996

957

68,918

880

59,492

898

52,074

Cases

Attendees

Technology

Conferences and

Training Programs

1,0191,004904NumberServices Contracts

332

499

280

418

264

452

Technologies

Companies

Technology

Transferred to

Industry

199719951994Item


ITRI: Intellectual Property Rights


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ITRI: Intellectual Property Rights -

Patents Awarded and Inventions

328

15

548

446

381368

277274

178

7859

3727134

20

41 51

291

229223188186

8 14

100200300

400500600

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997Yea r

NumboPensanInno

Patent

Inventions



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ITRI: Contributions to Taiwan

1. Establishing new high-tech industries

2. Upgrading traditional industries

3. Developing human capital4. Protecting the environment &

increasing industry safety



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Structural Change of Manufacturing Industry:

Taiwan (1986 - 1998)

Manufacturing, as %GDP

As % of Manufacturing:

Capital Intensive

Labour Intensive

Technology Intensive

Technology Manpower % of

(Total Employment)

R&D, as % Sales

39.4 28.6 27.5

35.5 37.7 35.8

40.4 26.8 23.6

24.1 35.5 40.7

12.9 20.6 238

(7.73M) (9.04M) (9.17M)

0.6 1.02 1.34

1986 1995 1998

Source: Cheng Sun, Development of Knowledge Economy in Taiwan (Chinese) 2001, Sun Min Books, Taipei, 2001

Data from (MOEA & NSC)


Shares of Taiwans Manufacturing Enterprises 1971-1996 (Unit: %)Emplo ment si e (persons) 1 99 100 499 >500


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By number of enterprises1971 95.43 3.82 0.751976 95.26 4.10 0.641981 95.93 3.54 0.53

1986 96.03 3.54 0.431991 97.58 2.12 0.301996 98.07 1.67 0.26

By persons engaged1971 35.62 28.25 36.131976 38.55 30.20 31.251981 41.66 28.80 29.54

1986 47.86 28.09 24.051991 56.48 21.30 22.221996 57.94 19.21 22.85

By value added1971 21.59 20.52 57.891976 28.25 27.85 43.911981 30.87 26.40 42.73

1986 35.01 26.73 38.261991 40.94 21.79 37.281996 41.35 19.63 39.02

Data Source: Industrial & Commercial census, Executive Yuan, Taiwan, ROC, 1954-1996Reference: M-W Hu, Futures 35 (2003) 379-392

Employment size (persons) 1-99 100-499 >500



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Source : Lee, Miller and Rowen, The Silicon Valley Edge, 2000



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The Features of the Silicon Valley Habitat

Knowledge intensity

High quality and mobile work force

Result Oriented meritocracy

Climate that rewards risk-taking and tolerates failure

Favorable government policies

Open business environment University-Institute-Industry interactions

Collaboration : business, government and non-profits

High quality of life

Specialized business infrastructure

Ref: Lee, Miller, Hancock, Rowen, The Silicon Valley Edge, Stanford University Press, 2000



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Resources

Infrastructure

Knowledge

Capital

Leadership Human

Network

The Roots of Hi-Tech Industry


The Roots of High Tech Industry


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LEADERSHIP

RESOURCES

National vision Strategy content Policy commitment

KNOWLEDGE

RESCOURCES

Basic research

R&D support Technology capacity

HUMAN

RESOURCES

Education Training & Re-education Entrepreneurship

Project management

CAPITAL

RESOURCES

Taxation

Banking practices Venture capital

NETWORK

RESOURCES

Globalization culture

Regional planning Marketing Channel

INFRASTRUCTURE

RESOURCES

Physical infrastructure

Legal system Social support Effective governance



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The Changing World!

Three axes of change:

* Technology * Globalization

* Democracy


N E i t S i T h l S i t


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New Environment: Science,Technology, Society

* Accelerated speed of change* Ubiquity of personal computer

* Internet and wireless technologies

* Overlapping manufacturing and service

* Compressed and transformed middleman trade* Prominence of small and medium enterprises

* Globalization based on localization

* Competition and cooperation

*Life time learning and continued education* Participative management


The old vertical computer industry, circa 1980


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The transformation of the computer industry

FROM Only the paranoid Survive, by Andrew S. Grove, 1996 by Andrew S. Grove

Used by permission of Doubleday, a division of Random House, Inc.


IBM DEC SperyUnivac

Wang

sales and

distribution

application

software

operating

systems

computer

chips


The new horizontal computer industry, circa 1995


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Retail

Stores

Superstores Dealers Mail Order

Word Word Perfect Etc.

DOS and Windows OS/2 Mac UNIX

Compaq DellPackard

Bell

Hewlett-

PackardIBM Etc.

Intel Architecture Motorola RISCs

The transformation of the computer industryFROM Only the paranoid Survive, by Andrew S. Grove, 1996 by Andrew S. Grove

Used by permission of Doubleday, a division of Random House, Inc.


The new horizontal computer industry, circa 1995

sales and

distribution

application

software

operating

systems

computer

chips


Concluding Remarks


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Concluding Remarks

Establish a national innovation system with

clear goals and responsibility for the players Nurture the roots of hi-tech industry

Strengthen national institute as linkage

Improve effectiveness of national institute by

project selection, project management, and

technology diffusion

Enable SMEs to take lead in innovation and

technology entrepreneurship Re-educate people for creativity & innovation



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Thank You!

[email protected]

[email protected]
mailto:[email protected]:[email protected]

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03 Vancouver Lin