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(This article is the second part of the two-part series: Made in Taiwan, Straight to the United States)

A Technological Cold War Brings in Foreign Cash

Chaney Ho (何春盛), Advantech’s Executive Director of the Board, says this new wave of returning Taiwanese companies will set off three chain reactions.

Number one, wages will rise. There will be dozens of companies, each looking to hire hundreds, even thousands of employees. This will fundamentally change the balance between supply and demand in the Taiwanese labor market.

Number two, Taiwanese research staff stationed in China will be coming home. Research follows production, especially when it’s research into production-related technology such as mechanism design.

Number three, foreign research centers based in China will relocate to Taiwan for fear of having their intellectual property stolen.

Ho says Taiwan can take this opportunity to become the “Gateway to China” for global tech companies. Taiwan has the advantage of not only being geographically near China, but also more trustworthy and respectful of intellectual properties than China.

In truth, much as Ho predicted, Google has been quietly increasing its investment in Taiwan.

Near the MRT Far Eastern Hospital Station, an old Far Eastern textile factory has been converted into the Taipei Far Eastern Telecom Park, also known as Tpark. In the park, construction crews are hard at work raising a towering new building in the middle of a green field. When the building is completed in 2020, it will become one of Google’s most important research centers in Asia.

Google’s Hardware Hub

In January 2018, Google completed its acquisition of HTC’s smart phone design team. The newly-acquired staff of 2,000 hardware and software research personnel was enough to turn Taiwan into Google’s biggest research and development center in Asia.

This March, Google announced it will expand operations in Taiwan. Its research team will be moving into Tpark and renting an entire sixteen-story building. They are also reserving room for “double-size growth.”

“In the near future, staff, equipment, and labs related to hardware development will all be integrated into this office,” Google’s Vice President of Hardware Elmer Peng (彭昱鈞) tells CommonWealth Magazine.

Photo by Chien-Tong Wang/CW

The Taiwanese smart phone team led by Peng announced a new series of smart phones, the Pixel 3a and Pixel 3a XL, during Google’s annual developer conference in May. It was a demonstration of Taiwan’s hardware research and development prowess.

“Hardware development requires certain conditions to be met. Optics, acoustics, radio frequency, vibration and temperature…you need all these in-house labs to develop hardware,” says Peng. This is different from software development, which can be done on a single computer. The entire ecosystem Google needs to develop hardware will be created in Taiwan.

Besides Google, other tech giants such as Microsoft and Amazon are also investing in R&D centers in Taiwan. One incentive is the profusion of experts in hardware and software integration to be found here. The other key is Taiwan’s special “soft power”—far superior protection of intellectual property compared to China.

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“Taiwan is a trustworthy partner. It is home to some of the brightest engineers and most advanced parts manufacturers in the world. Taiwan also does its part to protect intellectual property and trade secrets,” said William Brent Christensen, Director of the American Institute in Taiwan (AIT), during his speech at the opening ceremony of Applied Materials' new plant in the Southern Taiwan Science Park (STSP). This is Applied Materials' first display equipment manufacturing center and R&D lab in the world. It represents an investment of over three billion Taiwan dollars.

A Dutch Research Center Supplying Fantastic Technology

Among the many foreign tech companies to invest in Taiwan in the past year, the most talked-about may be ASML, the largest semiconductor equipment manufacturer in the world, setting up its Taiwan headquarters on the outskirts of Hsinchu City. In one fell swoop, ASML rented more than thirteen thousand square meters of office space on the top four floors of the TFC ONE office building.

ASML used wood and gentle pastel colors to furnish the office in a European style reminiscent of its Dutch headquarters. The staff gets their own cafeteria, gym, and labs--enough for 2,000 employees. But most of the space is empty at the moment.

To a certain degree, the Taiwan headquarters are being prepared in anticipation of the large number of engineers who will fly in from the Netherlands to support TSMC when it introduces extreme ultraviolet (EUV) lithography to its production lines.

As TSMC rapidly expands its production capabilities, ASML's Taiwan staff has increased to 2,500 employees in a few short years, making it one of the largest foreign firms in Taiwan. (Photo by Chien-Tong Wang/CW)

The EUV wavelength is only around 13.5 nanometers (nm), which is 1/55 of the wavelength of conventional lithography light sources. An EUV tool costs over one hundred million US dollars. The semiconductor industry expects this fantastic new technology to extend Moore's Law by at least another ten years.

The current Vice President of ASML is Anthony Yen (嚴濤南), who worked at TSMC for over twenty years. He recalls a moment from nine years ago, when he was a Division Director in charge of lithography at TSMC.

At the time, ASML was alone in its development of EUV technology. Their progress was severely delayed by various technical issues. Naysayers doubted the technology and said it could never be applied to actual production.

But Chiang Shang-yi (蔣尚義), head of research at TSMC, stood his ground. In the heart of TSMC in the Hsinchu Science Park, a large plot of land was allocated for the test run of TSMC's first, very pricey EUV tool.

ASML CTO Martin van den Brink was touched by this gesture of dedication. He said directly to Yen, "Tony, we have to make it happen!"

TSMC's steadfast devotion to research led to their adoption of EUV lithography for mass production this year, which is a technical achievement akin to the moon landing. TSMC is also expected to begin mass production of a small quantity of chips using the second-generation 7nm process with EUV lithography in the near future.

Translated by Jack C.

Edited by Sharon Tseng