TAIPEI, TAIWAN An article entitled “Silicon Island” was published in Forbes Magazine 21 years ago. In the midst of the 1998 economic crisis, the author of the publication noted that while the economies of other Asian countries plunged into recession, Taiwan was experiencing a kind of a technological gold rush.

After two decades, the Taiwanese economic miracle has not slowed down: an island in the Pacific Ocean, separated by a 150-kilometer strait from mainland China, has strengthened further its position as a world leader in manufacturing of semiconductors.

A luminous panel at Taoyuan Airport shows the outline of the island of Taiwan on a “map” in the form of a microchip. In fact, Taiwan’s share in global manufacturing of semiconductors is even larger, at almost one quarter. Photo: Yulia Tolkishevskaya, Sk.ruluminous panel at Taoyuan Airport shows the outline of the island of Taiwan on a “map” in the form of a microchip. In fact, Taiwan’s share in global manufacturing of semiconductors is even larger, at almost one quarter. Photo: Yulia Tolkishevskaya,


In numbers, the ITRI Corporation says, the situation looks like this. The annual turnover of Taiwanese microelectronic enterprises stands at USD 75 billion (according to the independent Taiwanese-Hong Kong portal TheNewsLens, the figures stands at $82 billion US; for comparison, all of mainland China produces $34 billion US worth of microchips). The Taiwanese market supplies 22.4% of the global market of microchips. All this is manufactured on a Pacific island the size of Belgium, with no mineral resources.

The Taiwanese economic miracle began in the Silicon Valley, where several thousand Taiwanese engineers got together in the 1980s. Ming Wu was employed at Intel, and dreamed of founding his own company. In the end it was exactly what he did: put together a team of 28 compatriots who worked in California, and founded Macronix in 1989. An American venture fund helped pay for it. Nintendo became one of first investors. Today when Macronix is already a multi-billion business, every Nintendo console has microchips designed and made in Taiwan.

“The combination of the American know-how and the Taiwanese entrepreneurship, engineering and manufacturing skills ultimately gave us something like a Pacific copy of the Silicon Valley,” the article in Forbes said. The conclusions drawn by the American journalist are as topical today as they were more than 20 years ago.

Participants of Skolkovo Business Mission. Visiting Macronix Corporation. Photo:


The Skolkovo business mission spent several days studying the components of this success, including possible cooperation opportunities with science parks, universities, technological companies and design centers of Taiwan. On the last day of their trip, the representatives of the company visited the Macronix Company. We will come back to this topic again below.

Intellectual Shock

“This is an intellectual shock of sorts,” Nikolay Suetin, Vice President of the Foundation for Science and Education said about his first impressions.

Taipei, as they would put it in Soviet newspapers, “is a city of contrasts.” The Taipei 101 skyscraper in the background until recently had been the tallest in the world. Photo: 


The delegation came to Taipei on Sunday and the first meeting took place in just two hours: almost all top managers of Alees Company (makers of electrochemical batteries) headed by their CEO Edward Chan came to the negotiations. There would be very few places in the world with such a business ethic; however, Taiwan is very much unlike other countries.

Taiwan’s entire economy depends on microchips. Photo: 

Edward Chan says that frankly, their product lacks a bit in quality but is very inexpensive (the Skoltech technology, he says, is a bit more expensive).

In some sense Alees is a very typical Taiwanese company. “People are focused on one product, and they understand exactly what is required of this product,” Nikolay Suetin says. The company considers itself a startup, although it employs 650 people, and it is the main supplier of cathode material for lithium batteries; the world's leading manufacturer of lithium batteries, Panasonic, receives most of this material from Alees.

The company has done a great number of tests; in particular, they tested their product for fire resistance. The batteries were tested for all imaginable case scenarios and the tests showed that their material did not catch fire, which was very important for the automobile industry.

“At the same time, they understand that they do not have enough resources, knowledge or experience for further development,” the Vice President of the Foundation said. “They look to the future and are very open to joint work and cooperation and are ready to learn, although today they are leaders in their industry segment. So they welcomed our proposal to meet and talk at Skoltech where we have a large world-class Center of Electric Chemistry. Skoltech, too, is interested in collaboration.

The management of the company had visited Moscow before, they visited some of the Russian academic institutions and they believe we have considerable opportunities for cooperation.”

Sea Turtles

During this business mission, the Foundation signed a cooperation memorandum with the National Taiwan University (NTU), the oldest university on the island.

According to Skolkovo’s Senior Vice President Alexander Chernov, who signed the document on behalf of the Foundation, the first concrete step in establishing the relationship between the parties will be the visit of the NTU delegation to Startup Village, the largest Eastern European technology conference which will be held in the Innovation Town in late May of this year. 

The Chinese would not be true to their nature if they had not conveyed some of the important ideas quite figuratively. A small fountain has been built at Chao Tong University by Taiwanese corporations. The bronze plaque reads: “As you drink your water, remember about the source of it.”

The University positions itself as a “single window” for interaction with the Taiwanese high-tech industry. Continuing this analogy, Alexander Chernov noted that Skolkovo would want to use the “single window” to let the Foundation’s companies gain access to the promising market of Taiwan.

Senior Vice President of Skolkovo Alexander Chernov with Pai-Chi Lee, Vice President of the National Taiwan University after signing the cooperation agreement. Photo: 


Nikolay Suetin was very interested in the work the National Taiwan University does with startups, patents, selection and creation of intellectual property. NTU has three different departments that deal with patenting, sale of licenses, and creation of startups.

“It would seem this work must be fully commercialized, however, the university does enjoy considerable state support. Here is one of the practical examples. Whenever a patent application is submitted, up to 70% of the fees are paid by the University. However, 70% of ownership of the patent belongs to the professor.

The second issue is the access to the industry with which the university has well-established contacts. Importantly, this way the demands and needs of the industry are regularly communicated to professors and startups. In fact, this is something we want to do at Skoltech, here this model is already in place, and we can make use of it because our partners are ready for active cooperation,” the interlocutor of said.

While NTU, founded during the years of the Japanese occupation of the island, celebrated 90 years of its history last year, the Chao Tong National University in the city of Hsinchu was founded fairly recently, in 2003. This university, too, is very much oriented to the needs of industry. The Senior Vice President of this university, Professor Edward Chan, who invited Skolkovo representatives to dinner, is said to be standing with one foot at the university, and with the other at TSMC, the largest Taiwanese technological company, which has its own representative office at the university. In the company’s office university undergrads, graduate students and professors can share their ideas with the company’s representatives.

“TSMC,” TheNewsLens portal notes, “is one of the few semiconductor companies in the world – along with Intel and Samsung – whose R&D capacities allow it to create increasingly smaller and more energy-efficient chips that pack more and more computing power.”

The campus of the National Chao Tong University in the Hsinchu Technological Valley. Photo:


According to Professor Chan, interaction between the university and the corporation is a two-way street. Often the university helps solve the problems presented by the factory; sometimes the university offers solutions on its own accord.

The Chinese would not be true to their nature if they had not conveyed some of the important ideas quite figuratively. A small fountain has been built at Chao Tong University by Taiwanese corporations. The bronze plaque reads: “As you drink your water, remember about the source of it.”

Nikolay Suetin says that he was impressed by what Professor Chan told him. In his laboratory he has not one but several gas-phase epitaxy units with which they can create unique materials of industrial quality. Staying in close contact with the industry allows the university lab to create small batches of ready microchips.

Edward Chan had created several successful companies of his own, but when they went public, he left them – the routine, he said, was not interesting to him.

At the office of TSMC Corporation in Chao Tong National University. (From left to right) Professor of the National Taiwan University Chao-Ming Fu, Yulia Tolkishevskaya and Nikolay Suetin (Skolkovo) and Artur Useynov, Associate Professor of the International College of Semiconductor Technologies. Photo:


Associate Professor at Chao Tong National University, Artur Useynov is a graduate of Kazan University. He has a remarkable biography in science. Having spent some time in Moscow, he then moved for three years to KAUST Research University in Saudi Arabia, then spent a year in the US, and then got hired by the University in Taiwan, having already spent four years here. He says that he is so busy that has no time to learn Chinese. His two young daughters, who were born here in Taiwan, understand Chinese well.

Nikolay Suetin has discussed the future of the semiconductor industry of Taiwan with Edward Chan in a lot of detail. “He says that the future belongs to new materials. Now every technology is silicon-based, but 5G will require many new materials.

By the way, Artur Useynov deals precisely with the new transistor architecture. These are the so-called tunnel transistors; there are many problems with that technology, but if he could come up with some new ideas, it would be quite interesting,” the Vice President of Skolkovo said.

Nikolay Suetin also noted that many scientific and technological problems in Taiwan are solved not in labs but in cafes: social life plays an overall important role in the island’s innovative ecosystem.

Another observation concerns the attitude of the people of Taiwan to education. Practically all high school graduates get admitted to the university. The problem, however, is that the island has a very low birth rate, and every year the number of local applicants decreases due to natural reasons. The University is trying to solve this problem by attracting talented people from abroad, in particular from Russia.

Representatives of Skolkovo also saw a slide which showed the most eminent foreign professors from most prestigious foreign universities working at Chao Tong National University. They include visiting professors from Berkeley, Harvard, MIT, UCLA, and Purdue. Most of them, with rare exceptions, are Chinese by origin.

Most foreign professors at Chao Tong University are ethnic Chinese from the US. Photo:


There is an idiom “sea turtles” (海龟) in Chinese. The term is used to describe specialists who, having graduated from a university and having worked abroad for some time, return home, just like sea turtles, they swim thousands of kilometers to their native shores to lay their eggs.

Design Centers

A meeting with top management of the Taiwanese representative office of Socionext, a Japanese company, was quite productive. Socionext is a so-called fabless company, i.e. a company that does not have its own factory. In essence, it is a design center. Unlike clothing designers, design centers in Taiwan do external orders, designing chips then placing them on local factories.

The holiest of all holy places in chip production is the ‘Clean Room’. Photo:

The logic of the Japanese technological company being present in Taipei is clear: first and foremost it is done for the purpose of establishing closer ties with the production division. More than that, the company has quite a few clients on the island. This is the principle that Japanese companies follow when they open offices abroad: they open them up where there are clients and developers.

Socionext is a joint venture of three leading Japanese technology companies; It has several hundred customers around the world, and annually they complete about the same number of projects, Nobuhiko Anecha, President of Socionext Taiwan, told

What opportunities does cooperating with Socionext open for Skolkovo? At any stage of the project Skolkovo companies can come for help to the Japanese company in Taiwan. You can simply fill out a form with technical requirements, and the Japanese company will use these technical requirements to design a chip from scratch. Another opportunity is to create a logical block scheme and go to Socionext with it. The third option is to create a chip in accordance with the mathematical model. In either case the client will receive the end product, produced and tested at the factory in Taiwan.

The Glory Wall of Faraday Company has been made from the names of its major clients. Nikolay Suetin is hopeful that Cyrillic letters will soon appear on the wall as well. Photo:

Faraday, a Taiwanese technological corporation, does about the same thing. The Skolkovo business mission visited them as well. The company also boasts a portfolio of own products – ready to use block microchips, which potential clients need in their work. The use of this portfolio allows the clients not to develop their microchip from scratch but to purchase a license for a very small fee. Faraday Company itself purchases IP blocks from Arma and other leading suppliers. A microchip is a puzzle of sorts that consists of several IP blocks combined together with the help of design appropriate for a particular solution.

Thus, the role of the Faraday Corporation is twofold, Mr. Suetin says: on the one hand, they are developers of ready-made IP-blocks, know well what the market needs, and trade in licenses; on the other hand, they help the client create the final solution from ready-made IP blocks at any stage of the client company’s development.

“I think that such a partner will be of much use to companies like Syntacore; this company already has its own IP nucleus,” he says. “But in addition to the nucleus they need the entire periphery, including memory interaction units, codes for fast input and output, etc. So this potential collaboration would look really cool.”

Taiwanese Silicon Valley

A significant number of Taiwanese technology companies are located in the Hsinchu Science Park, half an hour away by express train from Taipei. This is the Taiwanese duplicate of the Silicon Valley. Its area of 4,440 hectares is large enough to accommodate 11 Skolkovos. Located in the vicinity of the City of Hsinchu, the area is home to Chao Tong National University, which includes the International College of Semiconductor Technologies, the Taiwanese Semiconductor Research Institute with its own laboratory, and dozens of large and medium-sized technology firms.

This is what the innovative ecosystem looks in Taiwan. One Russian scholar working in Hsinchu told

“Here everything is next door, five minutes away is the entire industry.”

The headquarters of one of the largest Taiwan corporations in the Hsinchu Technology Valley. Photo:


The Science Park is part of the structure of the Ministry of Science and Technology of Taiwan. “The Techno-park has been actively developing, with not too many legal difficulties,” Nikolay Suetin commented on his impressions. “The president of the Techno-park basically approves new residents of the Park himself, and while naturally he does have a supervisory board and invited experts, the final decision is adopted by the director. If you consider the fact that this man has been in charge of the Hsinchu Park for 20 years, his decisions are usually pretty well grounded, judging by the projects that we looked at.”

The quality of Taiwanese projects is also obvious, for instance, from the exposition in the office of the Industrial Technology Research Institute (ITRI) in Taipei. The exposition changes fully twice a year.

The annual turnover of Taiwanese enterprises in the sphere of microelectronics is $75 billion. US The Taiwanese market supplies 22.4% of the global market of microchips. All this is manufactured on a Pacific island the size of Belgium, with no mineral resources.

One such project involved a special substance that could be used to treat the fabric to make it repel or attract water. This is a well-known technology but the Taiwanese tied this new product to two basic colours they developed, which can be combined to create any other colours. In the process of colouring, the fabric gets its water attractive or water repelling qualities. Importantly, the fabric covered with these substances is resistant to washing and practically, the colours do not run.

Another interesting technology has to do with reworking and re-using screens. Annually, hundreds of millions of screens break down, and the population of several states in India is busy taking them apart and disposing of them. In Taiwan they learned to extract indium, a very valuable metal, from broken screens. Representatives of ITRI say that the effectiveness of their technology is such that it is cheaper to extract indium from broken screens than recover it from raw materials. Indium of a certain degree of purity can be used and reused again an unlimited number of times.

In Taiwan they know how to extract indium from broken screens. Photo:

Glass and plastic from broken screens are also recycled in Taiwan.

“I cannot say that we saw something we had never heard of before, but these technologies have been already implemented on the industrial scale,” Vice President of Skolkovo said. “Not all the projects are of equal interest: in particular, the exoskeleton made in Taiwan is inferior in its characteristics to what ExoAtlet, a Skolkovo resident company, does.

What they do in Taiwan may not be rocket science, but in any case, these are high-quality products that the industry is ready to implement. I think this is the very step that we are missing, when the product is not brought up to the industry quality level yet.”

The delegation also appreciated the visit to the National Applied Research Labs (NARLabs), located in the Hsinchu Science Park. The NARLabs incorporates the Taiwanese Semiconductor Research Institute. Taiwan is home to a network of science centers that get almost 100% of their financing from the federal budget. There are some ten such centers in Taiwan, and they study various sectors, from seismology (Taiwan is one of the most earthquake hazardous places in the world) to microelectronics.

The Taiwanese Research Institute of Semiconductors under the National Applied Research Labs (NARLabs). Photo:


The line of microelectronics products in NARLabs is quite extensive, and they can make any chip there, but this is in no way a large-scale industrial production. Most employees here are students who completed appropriate training, and they can implement in practice any idea that was conceived in the university. Companies work in NARLabs, too. The reason for this is simple: companies must put out large quantities of products, and for economic reasons they cannot afford trying anything new. In the lab they have every piece of equipment that they have at the plant, if not more than that. For instance, NARLabs has an electronic lithograph, which is hardly used in large-scale production but can be useful in creating unique mechanisms. 

The laboratory functions in accordance with a few simple principles. They get 90% of their budget from the state, and earn the rest from the companies that pay fully for all the works in which they are involved. The University pays for nothing.

Sensor Lego: any sensor, produced at NARLabs can be tested with the help of a smartphone. Photo:

“How can Skolkovo use it?” Nikolay Suetin asks. “There’s just one way: with the help of an agreement with one of Taiwanese universities, either within the student exchange program or a joint project. Then, via the university we will be able to access this line, and this is one of the most modern lines of microelectronics in the world. The Taiwanese side is ready to start the cooperation project. Such an atmosphere here overall is due to the fact that they are small; they are ready to cooperate with anyone, especially given the pressure they feel from China.         Here we inevitably approach the topic that is relevant to everything that happens in Taiwan, and is mentioned in every conversation – the China factor.


Winds from the North

Passengers who come to Taipei these days must pass through a line of customs officials who carefully inspect the carry-on luggage of every passenger leaving the aircraft. A female voice announces through a loudspeaker that that anyone who has any meat products discovered in their luggage will face a fine of 1 million new Taiwan dollars (approximately 2 million rubles).

These strict measures were introduced because there is an epidemic of African swine flu in China but the authorities would not recognize it. Chinese passengers, illegal immigrants among them, bring products made of pork to Taipei, local authorities are convinced. The Taipei Times publishes this news on the first page.

The same newspaper reports that Chinese hackers had allegedly managed to crack the code that halted the easy forging of Taiwanese identity cards, which until very recently had been considered to be reliably protected. “These tricks would be more dangerous than the swine flu,” the article says.

The streets of Taipei are cleaner than the streets in almost any other city of the world, but you see many people wearing surgical masks. When you ask them why they have their masks on, they invariably reply: “It’s the winds from the north.” The islanders are convinced that the wind from across the strait brings over clouds of poisonous smog from the mainland China.

You can judge the size of Taiwan by the favorite mode of transportation of its residents. They say, the island is too small for a car, yet too big to walk. Pedestrians and scooter drivers alike invariably wear surgical masks. 

However, the real reason behind pollution is right there on the island, and it is the gigantic coal-fueled heating plant. But in this case it is not the expert analysis of the air that matters, but what is in the air politically. The political atmosphere if quite heated, especially after an unequivocally clear warning from Beijing earlier this year: Chinese authorities do not exclude any method when it comes to returning the island under the Chinese statehood.

“Despite tens of billions of dollars in trade turnover and increasingly close ties between people on both sides of the Taiwan Strait, China and Taiwan are becoming increasingly more remote politically,” says Richard McGregor in his “Asia’s Reckoning: The Struggle for Global Dominance” (2017).  

The attitude to China in the business community is also quite mixed. Without the Chinese market, without the Chinese workforce, the present-day prosperity of Taiwan would be impossible. Some 50% of Taiwan’s microelectronics is imported to China. That in turn makes Taiwanese companies quite vulnerable in the face of the trade war between Beijing and Washington and the slowing down of the Chinese economy.

To celebrate the 60th anniversary of the microchip, Faraday Corporation has prepared this self-explanatory installation. Photo:


“Imagine that you own a restaurant, and two of your most important clients start a fight between themselves,” a representative of Hsinchu Science Park told “This is bad news for the owner. So in the near future the present situation will negatively affect our business,” he says and adds: “But people will need new smartphones in the future anyway, so we will continue developing.”

The interview is taking place during the presentation of a science park. One of the slides presents the main components of iPhone7: 80% of them are made by Taiwanese companies on both sides of the Taiwan Strait. Yet, there is a threat looming over the historical optimism of the Taiwanese. This year began with Apple announcing a significant decrease in revenues due to falling iPhone sales (including sales on the Chinese market, whose share in global sales of Apple products has declined, according to Bloomberg, from 20% to 15%).

There is an allegorical sculpture installed in the hall of one of the technological corporations in the Hsinchu Valley: an empty rice bowl in the shape of a hemisphere, and chopsticks. The message is clear: you must work hard to earn your bowl of rice. Photo:


Traditionally the economy of the island is monocultural: from sugar cones to rice. Now their monoculture is represented by the best computer chips in the world. If people all over the world continue buying fewer and fewer smartphones, what fuel will they use to charge the engine of the Taiwanese economy, now working at its maximum capacity?

Some signs of overheated economy are visible already. Remember the Forbes article on the Silicon Island? Then, 21 years ago, the author noticed, among other things, blocks of beautiful new houses growing like mushrooms on the outskirts of Taipei and Hsinchu, and concluded that the development of microelectronics was bringing prosperity to the Taiwanese middle class. In the evening, when lights come on in those houses, the prosperity is no longer so obvious today. An employee at one of the universities in Hsinchu showed us a whole block of new buildings, where the windows in the evening remain dark. This district was built a few years ago, but developers increased the prices so much that only 10% of the apartments in these buildings were purchased. 


Enter Through Narrow Gates

On the last day of their visit the Skolkovo business mission visited two large Taiwanese companies, Macronix (which was discussed above) and Powerchip.

Corporate Office of Macronix in Hsinchu Technology Valley. Photo:

“It was, I would say, a sobering experience: these two companies showed us how hard life was in present-day microelectronics,” Nikolay Suetin says. 

Powerchip Corporation, where the delegation was received by its president Peter Chen, is number 6 in the world among contracted chip manufacturers. Initially, the company specialized in computer memory chips, so it understands very well how to integrate memory capabilities into modern microelectronic devices that require huge amounts of memory, especially neurochips.

“Despite the serious pressure, despite the fact that they abandoned their own product development, they are still developing the technology base for creating microchips and still provide all the services for joint development of products with the customer,” Vice President of Skolkovo said. “Unlike TSMC, the leader of Taiwanese microelectronics, which is too big to be interested in small batches and small startups like Skolkovo, representatives of Powerchip were very eager to talk to us and would like work with our residents.”

Macronix had once started with memory chips as well. Now it is a very narrowly specialized company which basically produces a single microchip type. They are trying to diversify a bit, and gain access to another market segment, but this process is not going too well.

Paradoxically, the company whose clients include Nintendo, Amazon, Nikon, and Panasonic; the company with the revenue of $1.2 billion US, 4,000 employees and 7,600 patents, is currently struggling to survive.

The vulnerability of these Taiwanese corporations comes from the fact that their products are just too narrowly specialized. They take up a lion’s share in their segment but this segment is becoming increasingly narrower due to the appearance of alternative technologies. This feature of individual corporations can be extrapolated to the entire economy of the Silicon Island, in which microelectronics occupies the lion's share. In a certain sense, the Taiwanese are now hostages of their own success, which lies in the fact that they were able to integrate into the global industry by supplying chips for it. However, it is this narrow specialization that makes Taiwan quite vulnerable.

“The general impression of what we saw is that each company occupies a very narrow niche, but does everything very efficiently, fairly inexpensively and knows all its potential customers. Meanwhile, Powerchip Corporation had had three spinoffs and they all failed.

Representatives of the Foundation were welcomed at Powerchip by the company’s president Peter Chen. 


Taiwan has quite a special attitude to supporting innovations. The state provides maximum support during product development, including the later stages of the development process, but after the development process is complete, the companies find themselves on their own. The most competitive of them survive, and since the whole island is exclusively export-oriented, the weight of external influences is enormous,” Nikolay Suetin says.

This, on the other hand, creates a window of opportunity for those who would like to work together with Taiwanese partners.

“This trip has once again showed us that to deal successfully with our partners in Taiwan – as, indeed, throughout Asia – we would need patience, consistency and the investment of time, including personal time,” Yulia Tolkishevskaya, representative of the Department of International Cooperation, told “There certainly are opportunities for cooperation out there. It seems that Taiwanese manufacturing companies are interested in any cooperation that will help them move from tier 2 to tier 1: to be not only key suppliers of microelectronic components, but also to create their own products as well.”