Memory card to front Taiwan's technology push

By Kathrin Hille in Taipei

FROM THE FINANCIAL TIMES

A Taiwanese IT consortium is to present a memory card this week that could help the island's electronics industry take a more active role in developing industry standards and help boost long-term profits.

MiCard, a memory card suitable for multiple interfaces and compatible with all existing but mutually exclusive cards backed by companies such as Sony and Toshiba, gained recognition as a new international standard from the Multimedia Card Association, an international industry body.

Since most of Taiwan's IT companies are contract manufacturers, they have so far been followers rather than leaders in setting global technology standards.

Although the island continuously ranks among the top four worldwide in terms of patents per capita, many of these patents are related to process technology only. At the same time, its companies need to pay royalties to global rivals for end product-related technology.

"Presently, local companies each year have to pay around US$40m of memory card-related royalties to overseas companies. Local firms, however, will not be required to pay royalties on miCard technology, enabling them to grab a share of the international memory card market and boost their profits," said the Industrial Technology Research Institute (Itri), a government-funded industry think-tank and incubator that organised the consortium.

The industry group consists of 12 Taiwanese companies led by Asustek, the world's largest motherboard maker, and ASE, the world's largest chip-testing and packaging company.

The MMCA's recognition of the miCard standard marks the first such international breakthrough. In order to give the island's IT companies a bigger role in spearheading new technology standards, the Taiwanese government is pushing local deployment of networks using Wimax, a high-speed wireless technology.

"These two strategies - being part of a global development effort at an earlier stage and taking the initiative ourselves for new products - are both ways to get Taiwan's companies more leverage and better margins in an industry they already dominate by volume," said Eric Jain, an analyst at Itri's Industrial Economics and Knowledge Center.

SOURCE: THE FINANCIAL TIMES