Upgrading the Economy: Industrial Policy and Taiwan’s Semiconductor Industry Case Solution & Answer

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This Case is about COMPETITION, ECONOMIC DEVELOPMENT, GOVERNMENT, TECHNOLOGY

PUBLICATION DATE: February 13, 2009 PRODUCT #: 609089-PDF-ENG

The government-led development and incubation of the semiconductor industry in Taiwan is a striking success for supporters of strong industrial policy. It has actually caused the island country’s dominance of the international “factory” company where companies like Taiwan Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC) produce the designs of “fabless” design services. The 2 have a combined international market share of near to 70% of this worldwide company sector.

This success was even more striking due to the fact that when the effort started, the nation had few of the big scale companies that might support the R&D and scale essential to get in such advanced capital extensive markets.

Upgrading the Economy Industrial Policy and Taiwan's Semiconductor Industry Case Solution

There were no companies with the deep technological roots or the ability base to even start. Federal government organizers acknowledged the difficulties of upgrading the country’s innovation base and created a method that required the production of “pilot companies” that would serve as cars to bridge in between sources of leading edge innovation (mainly sourced from abroad) and the commercialization to be brought out by regional companies.