Feb. 16, 2001

The optoelectronics industry, widely regarded as a rising start, may become a battlefield of intense competition between Taiwan and China, according to reports in local media.

Electro-optical monitors and fiber-optic communications are playing an increasingly important role in Taiwan's optoelectronic industry. And China has recently designated the sector as one of the most important industries in its Five-Year Plan from 2001-2005. In addition to electro-optical monitors and fiver-optics communications, the Plan emphasizes fax machines, digital cameras, and CD-ROM drive optical components.

Taiwan's experience and technologies in accomplishing mass production over the past few decades may initially enable it to retain an edge over China in this race. However, China's sound research capabilities and pools of experts will be difficult for Taiwan to match in the long run. In fact, Taiwan's government is exploring the feasibility of introducing related experts from China, hoping the satisfy local firms whose rapid-growing businesses have been dampened by the tight supply of qualified technicians.

With the support of foreign high-tech powerhouses including Lucent Technologies, China is working to establish optoelectronics production hubs in Wuhan, Shanghai, and Guangzhou. At the initial stage, these centers are said to concentrate on developing fiber-optic communications technology.

Nevertheless, the sources pointed out, it is Taiwan's makers of DVD players that will take the hardest blow if China's optoelectronics projects runs smoothly. On the strength of its research results, China is expected to obtain patents for DVD players. That would enable China to claim royalties from firms in Taiwan.

Also, China's large domestic market will enable it to formulate its own specifications for DVD players. Moreover, Japan's DVD-player plants are said to be placing high-volume orders for key components (such as optical pick-up heads ) and will establish related production lines in China. This would help slash production costs for China's DVD industry and eventually leave Taiwan's low-range counterparts isolated.

While the reports left open which side will be the winner in this battle, the authors join many other sources and institutions that cooperation rather than competition with China would be the better solution for the good of Taiwan.