Jan. 21, 2002

For the first time on record, Mainland China surpassed Taiwan in the output of IT products last year, the Market Information Center of the government-backed Institute for Information Industry, Taiwan's top authority in IT-related analysis, said in Taipei.

China's production in the sector amounted to US$28.17 billion compared to Taiwan's US$20.12 billion, underlining the dramatic rise of the mainland as a major global IT hardware production center. According to the MIC, the production gab is likely to widen this year. China's output grew by 10.3% last year, while Taiwan's declined by 12.8% from 2000's US23.08 billion.

The MIC estimates, however, that global IT production by Taiwan companies will turn positive again this year, with growth estimated at 9.4% and Taiwan continuing to play an important role in the global IT industry.

Growth prospects across the Taiwan strait look even better, as China recorded impressive growth rates in its own IT sector, as Taiwan hardware manufacturers continue to flood west. Nearly all major Taiwan PC makers have plants in the mainland, with Acer Peripheral, an early arrival in China, operates a high video monitor plant in Suzhou, Jiansu Province. Wistron, the manufacturing arm of Acer for desktop PCs, notebook PCs and PDAs has its largest factory in Zhongshan, Province of Guandong.

Component suppliers are also joining the exodus in order to be closer to the China factories of their downstream customers.

While China is attractive for low cost production, Taiwan companies also have their eye on the rapidly growing demand in the mainland market itself. Las year, some eight million desktop PCs were bought in the mainland, with 1.6 to 1.8 million expected to follow this year.

Taiwan companies will turn out 6.3 million units in China that represents 37% of their global total, compared to only 5.2% last year.

All of Taiwan's notebook PC makers, including Mitac, Acer, Quanta, Compal, FIC, Asustek, Arima, Twinhead, and Inventec, have all established plants in China already.

The growing importance of China has also been recognized by Taiwan's industrial associations and trade promotion bodies, which are as anxious as producer to set up bases across the Taiwan Strait.

Taiwan's semi-official China Trade Development Council (CETRA) will soon have representatives stationed in the mainland year-round to service Taiwan companies with operations there. The Taiwan Electric and Electronic Manufacturers Association (TEEMA) plans to open a liaison office in China as soon as the Taiwan government give it and other associations the go-ahead, the chairman of TEEMA told the press.