Taiwan science park revenues recover from slump

Taiwan science parks revenue rebound to NT$2.38 trillion in 2016

United Microelectronics Corporation (UBC) headquarters in Hsinchu Science Park. (By Central News Agency)

TAIPEI (Taiwan News) -- Taiwan's science park revenues inched up 2.94 percent year-on-year (YoY) to NT$2.38 trillion (US$78.01 billion) in 2016, due to strong demand in the precision machinery and biotechnology industries, said the country’s Ministry of Science and Technology (MOST) officials.

 “Science park revenues have set a new record since the establishment of the country’s first science park in the 1980s,” said a MOST official.

The figures show Taiwan’s high technology industries are recovering from the economic downturn in 2015, during which the nation’s science parks revenues reported a decline of 0.7 percent YoY to NT$2.31 trillion.

Growth in science parks in northern, central and southern Taiwan combined created 269,041 new jobs last year, an increase of 3,950 jobs compared to 2015.

The strongest growth was reported in the nation’s precision machinery industry, where revenues were up 19.32 percent YoY to NT$97.8 billion, supported by surging demand for advanced precision machinery equipment in the semiconductor industry, and emerging demand from the electric vehicle market.

For example, Fukuta, the Taiwanese supplier of Telsa’s electric motors, applied to construct its new plant in Hsinchu Science Park. The application was approved in July 2016 and construction will cost NT$600 million. Fukuta supplies 100,000 electric motors to Telsa annually.

The biotechnology industry ranked second in revenue growth with 15.25 percent YoY to NT$22 billion, due to stellar performance in medical equipment exports. Growing numbers of biopharmaceutical and vaccination companies also contributed to the industry’s revenue increase.

The IC industry reported modest revenue growth of 8.67 percent YoY to NT$1.57 trillion, driven by smartphone sales, as well as high demand for processing chips in the notebook and communications sectors.

In stark contrast, oversupply and waning market demand from China caused Taiwan’s optoelectronic industry to report a revenue decline of 11.25 percent YoY to NT$594.7 billion.

Panel manufacturers in Hsinchu Science and Industrial Park, for instance, witnessed decreased demand last year, caused by Samsung’s decision to shut down its seventh-generation TFT-LCD panel factory.

Moreover, Sharp’s termination of supplying TV panels to Samsung and Hisense last year dealt another blow to the country’s optoelectronic demand.

Panel manufacturers at the Hsinchu science park reported a revenue decline of 30.7 percent YoY to NT$64.4 billion.

LED component manufacturers at the Hsinchu science park also continue to face challenges, caused by the anemic global LED market, plummeting lighting product retail prices, and intensifying competition from China.

According to statistics gathered by Hsinchu Science and Industrial Park, LED revenue at the park dropped 6.82 percent YoY in 2016 to NT$54.03 billion.

Solar battery manufacturers' revenue at the Hsinchu science park also plummeted 39.9 percent YoY to NT$12.10 billion last year.

Declining global PC shipment volume, and high inventory levels led to a decrease in OEM orders for Taiwan’s computer and accessory industry, which reported a revenue drop of 2.86 percent YoY to NT$40.88 billion.

Meanwhile, the internet and communications technology (ICT) sector reported only a slight dip of 0.29 percent YoY to NT$38.03 billion in 2016, cushioned by growing demand for mobile communications equipment, including optic cables and base stations.

However, the ICT sector suffered from overly concentrated demand from specific smartphone brands that were impacted by their clients' sluggish new high-end smartphone sales. Smartphone brands have become more conservative and speculative in 2016.

Nationwide science park export value increased 9.91 percent YoY to a record high of NT$1.51 trillion, while imports into the parks were up 13.97 percent YoY to NT$82.64 billion.

MOST officials were conservative with the science park revenue outlook for 2017, expecting only incremental growth.

"We expect total revenues from science parks to reach NT$2.4 trillion in 2017," said Chyou-Huey Chiou (邱求慧), director of Department of Academia-Industry Collaboration and Science Park Affairs.