June 10, 02

Sony of Japan will buy the equivalent of US$ 2.19 billion worth of Taiwan products this year, up 50% from last year's US$1.46 billion.

Between US$586 million and US$7333 million of the total will be purchases related to the PlayStation 2 (PS2) game consoles.

Sony was the biggest Japanese buyer of Taiwan products last year, and it is expected to retain this top position.

Sony also plans to set up an IC R&D headquarter in Taiwan next year, according to sources. The company said that due to Taiwan's high-level IC manufacturing and design capability it will increase IC procurement here to tens of billions of US dollars annually in the next few years.

Sony has formed close ties with domestic firms over the past two years with the help of Taiwan's Ministry of Economic Affairs. The company set up an information appliance (IA) Innovation and R&D headquarter in Taiwan in April and is spending the equivalent on US$ 44 million on R&D here this year.

A ministry official said that Sony has shown interest in transferring manufacturing technologies to Taiwan companies and increasing orders of IA products from Taiwan subcontractors. It contracts the production of notebook computers to Asustek Computer Inc. and Quanta Computer Inc. and PS2 game consoles to Hon Hai Precision Industry Co. and Asustek.

According to the ministry's statistics, Japan heavyweights Sony, NEC, Toshiba,, Hitachi and Mitsubishi bought a combined US$4.41 billion worth of Taiwan products last year, up 22.2% from the amount of last year.

In related news, Fujitsu plans to increase IT procurement from Taiwan firms. The company held one-on-one discussions in Taipei with around 200 local companies for the purchase of IA servers, 3G mobile phones, and other items in April. This was Fujitsu's first-ever Taiwan technology purchasing summit in Taiwan with these 200 companies, which were carefully screened and selected for this purpose.
The company estimated it would purchase some 233-product items from 10 business units in 2002.

This summit is a result of concerted efforts by Taiwan's office of the Committee for Information Industry Development under the Ministry of Economic Affairs and the government-backed Institute for Information Industry (III). "The massive rise in cooperation with Japanese companies is testament to Taiwan's rise as a high quality research and design center", said Shi Yen-shiang, vice minister of Economic Affairs.
"The Japanese know that by teaming up with Taiwan, they can boost competitiveness and time-to-market. This is similar to how so many of Silicone Valley's companies get an edge by entrusting Taiwan companies with design and manufacture," he added.

"Japanese companies are known for their commitment to quality," said F.C. Lin, president of the III. "Increased purchasing and cooperation with Taiwan companies show that Taiwan has reached the highest level."

America joining in, too

Linksys Group, Inc. of the United States will buy around US$ 300 million with of networking equipment from Taiwan, or 50% more than last year's US$200 million, according to the company's vice president Y.W. Tsiao.

Over the past 133 years, Linksys has become the leader in sales of wireless routers, network cards and USB adapters to home and small business office users through retail and e-commerce channels.

Linksys has contracted a dozen or so Taiwan manufacturers to supply it networking equipment, including wireless local area network cards, wireless access points, routers, cable modems, print servers and gateways. The Taiwan contractors include Askey Computer Corp., GemTek Technology Co. Ltd, AboCom Systems, CyberTAN Technology Inc., and Sercomm Group.

Vice president Tsiao emphasized that all of his company's products are developed in the United States but made in Taiwan.

He added that the North American market began recovering in the first quarter and should be back on track by the end of the current quarter, following last year's lukewarm performance.