2008 TAIWAN INDUSTRIAL OUTLOOK

====Contents====

Preface

Macroeconomic Overview

Chapter 1　 Outlook of Global Economics 1

Chapter 2　 Outlook of Taiwan's Economy 7

Chapter 3　 Major Developmental Issues of Taiwan's Manufacturing Sector 17

Industry Insights

Chapter 1　 IC Industry 31

Chapter 2　 Electronic Components Industry 39

Chapter 3　 Flat Panel Display (FPD) Industry 63

Chapter 4　 Electronic Material Industry 73

Chapter 5　 Communications Industry 85

Chapter 6　 IT Industry 93

Chapter 7　 Machinery Industry 135

Chapter 8　 Vehicle Industry 165

Chapter 9 Steel and Light Metals Industries 193

Chapter 10　Petrochemical Industry 231

Chapter 11　Textile Industry 267

Chapter 12　Biotechnology Industry 293

Chapter 13　Pharmaceutical Industry 315

Chapter 14　Medical Device Industry 337

Chapter 15　Food Industry 359

ITIS Program Outline

The Organization of ITIS

====Table====

Table 1-2-1 Expenditure on Gross Domestic Product of 2006 and 2007 7

Table 1-3-1 Taiwan’s Industrial Construction and Growth Contribution of GDP 2005-2006 18

Table 1-3-1 Taiwan’s Industrial Construction and Growth Contribution of GDP 2005-2006 (Continued) 19

Table 2-1-1 Taiwan’s IC Industry Output Value and Trend in Added Value 35

Table 2-2-1 Notebook PCs with LED Backlight 48

Table 2-2-2 Metal Raw Material Price Comparison 51

Table 2-2-3 2008 Global Electronic Component Market Demand Forecasting 59

Table 2-2-4 2008 Taiwan’s Electronic Component Industrial Output Forecasting 60

Table 2-3-1 Global Trend of FPD Output Value 2003-2008 64

Table 2-3-2 Global Trend in FPD Key Component Output Value 2003-2008 64

Table 2-3-3 Taiwan’s Trend in FPD Output Value 2003-2008 65

Table 2-3-4 Taiwan’s Trend in FPD Key Component Output Value 2003-2008 66

Table 2-3-5 Taiwan’s Large-sized TFT LCD FPD Industry Performance 67

Table 2-4-1 Global Electronic Material Market 74

Table 2-4-2 Taiwan’s Electronic Material Market 75

Table 2-4-3 Solar Photovoltaic Materials Industry Trends 77

Table 2-4-4 Capacity of TAC Film for LCD Polarizer 82

Table 2-4-5 Comparison of Two New Entry Competitors in TAC Business 83

Table 2-5-1 Annual Added Value of the Taiwanese Communications Equipment Industry 88

Table 2-6-1 Shipment Performance for Key Product Segments in the Taiwanese IT Hardware Industry in 2007 99

Table 2-6-2 Shipment Performance Forecasts for Key Segments within the Taiwanese IT Hardware Industry in 2008 110

Table 2-6-3 Taiwanese Information Software Industry Value 2005-2010 119

Table 2-6-4 Value of the Main Subsegments within the Taiwanese Computer Software Industry 2005-2010 120

Table 2-6-5 Taiwanese Computer Software Export Value 2005-2010 120

Table 2-6-6 The Export Value of the Main Subsegments within the Taiwanese Computer Software Industry 2005-2010 121

Table 2-6-7 The Export Value of the Taiwanese Embedded Software Industry 2005-2010 121

Table 2-6-8 Taiwanese Software Market Value 2005-2010 122

Table 2-7-1 Illustrates The Main Categories and Sub-categories of Ordinary Machines and The Products Included in Each of These Sub- categories 137

Table 2-7-1 Illustrates The Main Categories and Sub-categories of Ordinary Machines and The Products Included in Each of These Sub- categories (Continued) 138

Table 2-7-2 The Value Added Rates and Profit Rates of the Sub-categories of the machinery Industry in Taiwan in 2006 145

Table 2-7-3 The Export Values and Growths of the Sub-categories of the Machinery Industry in Taiwan 147

Table 2-8-1 Taiwan’s Vehicle Production Value 2002-2007 170

Table 2-8-2 Taiwan’s Vehicle Industry Value Added Analysis 2002-2007 171

Table 2-8-3 Existing Export Auto Makers and Would-be Export Auto Makers 174

Table 2-8-4 Export (Import) Trade Balance of Car Parts and Components 176

Table 2-8-5 Issues for Developing Intelligent Vehicles 179

Table 2-8-6 Production Volume of Kwang Yang and Sanyang 2002-2006 (Including KD Parts) 182

Table 2-8-6 Production Volume of Kwang Yang and Sanyang 2002-2006 (Including KD Parts)(Continued) 183

Table 2-8-7 Internal and External Key Factors Affecting the Development of Taiwan’s Automobile Industry 187

Table 2-8-8 Outline of Future Development 189

Table 2-9-1 Statistics of Apparent Global Steel Consumption 2006-2008 196

Table 2-9-2 Statistics of Annual Production Capacity for Taiwan’s Steel Refining Equipment in 2007 197

Table 2-9-3 Statistics of Various Steel Forms Production Capacity in 2007 198

Table 2-9-4 Statistics of Production Value, Import and Export Value and Added- Value for Taiwan’s Steel Industry 2003-2008 199

Table 2-9-5 Adjustment Measures of the Chinese Steel Industry 2004-2007 201

Table 2-9-6 Statistics of Chinese Import and Export Products and Import and Export Countries in 2006 202

Table 2-9-7 Taiwan’s Aluminum Industrial Chain and Representative Makers 211

Table 2-9-8 Market Demand and Supply Analysis of Aluminum Rolling Product in Taiwan 2003-2008 213

Table 2-9-9 Changes in Aluminum Import Volume in Taiwan 2002-2007 215

Table 2-9-10 Changes in Aluminum Ingot Export Volume in Taiwan 2002-2007 216

Table 2-9-11 Changes in Aluminum Export Volume in Taiwan 2002-2007 217

Table 2-9-12 Taiwan’s Magnesium Industrial Structure and Representative Makers 221

Table 2-9-13 Changes in Supply and Demand for Magnesium in Taiwan 222

Table 2-9-14 Taiwan’s Titanium Industrial Structure and Representative Makers 225

Table 2-10-1 Value added Analysis in Taiwan’s Petrochemical Industry 248

Table 2-10-2 Major Green Regulations from Developed Nations Impacting Taiwan’s Chemical Industry 250

Table 2-10-2 Major Green Regulations from Developed Nations Impacting Taiwan’s Chemical Industry (Continued) 251

Table 2-10-3 Chinese General Plastics Import Analysis 255

Table 2-10-4 The 4th phase Expansion Project List of Formosa’s No.6 Cracker 257

Table 2-10-5 2008 Petrochemical Price Forecasting 259

Table 2-10-6 Comparison of Export Competitiveness for PE and EG in China Market 261

Table 2-10-7 Top Ten Global Ethylene Producers in 2000 and 2007 262

Table 2-10-8 Taiwan’s Tariffs on Petrochemicals 262

Table 2-11-1 Output Value of Taiwan’s Textile Industry 271

Table 2-11-2 Textile Exports and Domestic Sales for Taiwan (Jan-Sep of 2006 & 2007) 271

Table 2-11-3 Value of Textile Inventories for Taiwan (Jan-Sep of 2006 & 2007) 271

Table 2-11-4 Number of Factories and Number of Employees in Taiwan’s Textile Industry 272

Table 2-11-5 Size of Taiwan’s Textile Industry Market 272

Table 2-11-6 Textile Trade Statistics for Taiwan (Jan-Sep, 2007) 273

Table 2-11-7 Month-by-Month Prices of Polyester Raw Material and Yarn 277

Table 2-11-8 US-Korean FTA Textile Product Tariff Reduction Model and Textile Product Percentages 282

Table 2-11-9 Tariff Rates for Type A Products 282

Table 2-11-10 Value of U.S. Textile Imports from Taiwan and South Korea in 2006 283

Table 2-11-11 Unit Prices of U.S. Textile Imports from Taiwan and South Korea 285

Table 2-11-12 Foreign Investment by the Textile Industry 288

Table 2-12-1 Global Biotechnology Industry at a Glace in 2006 294

Table 2-12-2 Top Ten Biotech Companies based on Global Revenue in 2006 295

Table 2-12-3 Top Ten Biotech Partnership/Licensing deals of 2006 and 2007 297

Table 2-12-3 Top Ten Biotech Partnership/Licensing deals of 2006 and 2007 (Continued) 298

Table 2-12-4 Top Ten Announced Biotech M&A of 2006 and 2007 299

Table 2-12-5 Top Ten Biopharmaceuticals Based on Global Sales in 2006 300

Table 2-12-6 Biopharmaceuticals Pipeline Developed by Taiwan Companies 303

Table 2-12-7 Biotech Companies Invested by the Development Fund 312

Table 2-13-1 Categories of Taiwan’s Pharmaceutical Industry 316

Table 2-13-2 Global Top Ten Prescription Drug Sales in 2006 318

Table 2-13-3 Global Top Ten Pharmaceutical Companies in 2006 320

Table 2-13-4 Taiwan’s Pharmaceutical Industry Production Output 2002-2008 322

Table 2-13-5 Taiwan’s Pharmaceutical Industry Added Value 2003-2008 323

Table 2-13-6 Statistics of Imports and Exports for Taiwan’s Pharmaceutical Industry 324

Table 2-13-7 Taiwan’s Top Twenty Blockbuster Drugs Rankings 325

Table 2-13-8 Taiwan’s Top 20 Pharmaceutical Companies by Sales 326

Table 2-13-9 Taiwan’s New Drug Technology Licensing Status 327

Table 2-14-1 Ability to Set Market Standards in the Medical Device Industry 343

Table 2-14-2 Level of Command of Key Technologies in the Medical Device Industry 346

Table 2-14-3 Level of Command of Key Components in the Medical Device Industry 347

Table 2-14-4 Level of Command of Key Materials in the Medical Device Industry 347

Table 2-14-5 Analysis of Taiwan’s Medical Device Industry Profile 2002-2006 349

Table 2-15-1 Production Value of Taiwan’s Food Industry 360

====Figure====

Figure 1-2-1 Average Earnings of Employees and the Growth Rates of Industry and Service Sector 9

Figure 1-2-2 Unemployment Rate 10

Figure 1-2-3 Consumer and Producer Price Indices 10

Figure 1-2-4 Fixed Capital Formation 11

Figure 1-2-5 Taiwan’s Trade Surplus 12

Figure 1-2-6 The NT Dollar Exchange Rate against the US Dollar in 2007 14

Figure 1-2-7 Overnight Interbank Call-Loan Rate in 2007 15

Figure 1-3-1 Taiwan’s Manufacturing Gross Output and Added Value 1991-2006 20

Figure 1-3-2 Construction of Taiwan’s Manufacturing Added Value 1991-2006 23

Figure 1-3-3 Number of Employees and Average Labor Compensation of Taiwan’s Manufacturing Industry 1991-2006 23

Figure 1-3-4 Component Ratio of Taiwan’s Manufacturing Added Value 1991-2006 24

Figure 1-3-5 Construction of Taiwan’s Manufacturing Value-added Rate 1991-2006 24

Figure 2-1-1 Global Semiconductor Sales, Production, and Average Price 33

Figure 2-1-2 B/B Ratio of North American Semiconductors 34

Figure 2-2-1 Scope of the Electronic Components Industry 39

Figure 2-2-2 Global Electronic Components Market Demand 2003-2008 43

Figure 2-2-3 Global Electronic Components Market Share (By Region) 2007 and 2011 44

Figure 2-2-4 Global Electronic Components Market Share (By Application) 2007 and 2011 44

Figure 2-2-5 Taiwan’s Electronic Components Output 2003-2008 45

Figure 2-2-6 Taiwan’s Electronic Components Output Added Value 2003-2007 46

Figure 2-2-7 Global 18650 Lithium Battery Supply 47

Figure 2-2-8 Declining Price of LCD-TV 49

Figure 2-2-9 LED Lighting Applications 50

Figure 2-2-10 PCB Manufacturing Gross Profit versus Copper Price 52

Figure 2-2-11 Korea 2020 non-ferrous Metal Technology Development Strategy 53

Figure 2-2-12 Taiwan’s Future Opportunities in Metal Material Development 54

Figure 2-2-13 Low-end PC and High-end Mobile Phone 55

Figure 2-2-14 Future Trend Analysis on Mobile Phone Market 55

Figure 2-2-15 Low-end PC Supply Chain in Taiwan 57

Figure 2-2-16 Humanization Trend of System Product Design for 2020 and 2030 58

Figure 2-3-1 Market Trend of Various Panel Display Products 2004-2008 69

Figure 2-3-2 Panel Industry Competing Country Positions in 2007 71

Figure 2-4-1 Material Change in Intel’s CPU 78

Figure 2-4-2 Supply-Demand Forecast on Poly-silicon for Solar Cell Manufacturing 79

Figure 2-5-1 Global Communications Equipment and Service Market Forecast 86

Figure 2-6-1 Taiwanese Notebook PC Shipment Volume 2003-2012 111

Figure 2-6-2 Taiwanese Desktop PC Shipment Volume 2003-2012 112

Figure 2-6-3 Taiwanese Motherboard Shipment Volume 2003-2012 113

Figure 2-6-4 Taiwanese Server Shipment Volume 2003-2012 114

Figure 2-6-5 Taiwanese LCD Monitor Shipment Volume 2003-2012 115

Figure 2-6-6 Taiwanese CRT Monitor Shipment Volume 2003-2012 115

Figure 2-6-7 Taiwanese Optical Disk Drive Shipment Volume 2003-2012 116

Figure 2-6-8 Taiwanese Digital Still Camera Shipment Volume 2003-2012 117

Figure 2-7-1 The Range of the Machinery Industry in this Study 136

Figure 2-7-2 A Pie Chart Illustrating Percentages of The Firms in the Machinery Industry in Terms of Turnover 140

Figure 2-7-3 A Bar Chart Illustrating the Output Values And Growth Rates of the Machinery Industry in Taiwan 1982-2007 141

Figure 2-7-4 The Output Values and the Average Annual Growths of the Sub-categories of the Machinery Industry in Taiwan in 2007 142

Figure 2-7-5 The Global Market of Machine Tools 1997-2006 149

Figure 2-7-6 The output Values of Machine tools Made in Taiwan, China, Japan and Korea 1997-2007 151

Figure 2-7-7 Several Big Groups have been Gradually Formed in the Machine Tool Industry in China 154

Figure 2-7-8 The National Policies and the Goal of the Enhancement in Production Scale in China 156

Figure 2-7-9 A Prediction Regarding the Output Values of the Machinery Industry of this Country in the Next Few Years 157

Figure 2-7-10 The Path to Enhance the Value Added for the Manufacturing Sector 161

Figure 2-7-11 The Monetary Values of the Machine Tools Exported to Two Types of Countries-advanced Countries and Developing/Emerging Countries 2000-2006 162

Figure 2-7-12 A Figure Schematically Illustrating the Big Growths in the Output Value of the Machine Tool Industry in Taiwan 164

Figure 2-8-1 Motorcycle Categorization 167

Figure 2-8-2 Technology Correlation 168

Figure 2-8-3 Sales of Domestic/Import Vehicles 172

Figure 2-8-4 Statistical Data of Taiwan’s Motorcycle Sales Quantity (Including KD Case) 181

Figure 2-8-5 Change of Basic Consumer Price Index (Oil expense) 184

Figure 2-8-6 Variation of Import Car Customs Tax/Market Share and Actual Exchange Rate Index 185

Figure 2-8-7 Taiwan and Global ATV Sales 190

Figure 2-9-1 Scope of the Steel Industry 193

Figure 2-9-2 Production and Apparent Consumption Statistics of Taiwan’s Crude Steel 1979-2008 199

Figure 2-9-3 Statistics of Chinese Crude Steel Production 1970-2009 200

Figure 2-9-4 Import and Export Trends of Major Waste Steel Trading Countries 205

Figure 2-9-5 Excess Global Crude Steel Capacity and the Trend of Steel Prices 208

Figure 2-9-6 Change of Import Volume for Aluminum Ingot in Taiwan 2002-2007 214

Figure 2-9-7 Changes in Production Value of Taiwanese Magnesium Products 2003-2008 222

Figure 2-9-8 Changes in Production Value of Taiwanese Titanium Alloy 2003-2008 226

Figure 2-9-9 Changes in Titanium Alloy Import Volume in Taiwan 1997-2007 227

Figure 2-10-1 Petrochemical Industrial Structure 232

Figure 2-10-2 The Outlook of Taiwan’s Ethylene Supply and Demand 233

Figure 2-10-3 The Outlook of Taiwan’s Propylene Supply and Demand 234

Figure 2-10-4 The Outlook of Taiwan’s Butadiene Supply and Demand 235

Figure 2-10-5 The Outlook of Taiwan’s Benzene Supply and Demand 236

Figure 2-10-6 The Outlook of Taiwan’s Toluene Supply and Demand 237

Figure 2-10-7 The Outlook of Taiwan’s Xylene Supply and Demand 237

Figure 2-10-8 The Outlook of Taiwan’s LDPE Supply and Demand 238

Figure 2-10-9 The Outlook of Taiwan’s HDPE Supply and Demand 239

Figure 2-10-10 The Outlook of Taiwan’s PP Supply and Demand 240

Figure 2-10-11 The Outlook of Taiwan’s PVC Supply and Demand 241

Figure 2-10-12 The Outlook of Taiwan’s PS Supply and Demand 242

Figure 2-10-13 The Outlook of Taiwan’s ABS Supply and Demand 242

Figure 2-10-14 The Outlook of Taiwan’s EG Supply and Demand 243

Figure 2-10-15 The Outlook of Taiwan’s PTA Supply and Demand 244

Figure 2-10-16 The Outlook of Taiwan’s CPL Supply and Demand 245

Figure 2-10-17 The Outlook of Taiwan’s VCM Supply and Demand 246

Figure 2-10-18 The Outlook of Taiwan’s SM Supply and Demand 247

Figure 2-10-19 The Outlook of Taiwan’s AN Supply and Demand 247

Figure 2-10-20 Crude Oil Price Trend Analysis 252

Figure 2-10-21 Ethylene Capacity Expansion in Mainland China 254

Figure 2-10-22 Middle East Ethylene Expansion 260

Figure 2-11-1 Value of Global Textile and Apparel Exports 267

Figure 2-11-2 Changes in Textile Exports from the World’s Ten Leading Export Areas 2005-2006 268

Figure 2-11-3 Changes in Apparel Exports from the World’s Ten Leading Export Areas 2005-2006 268

Figure 2-11-4 U.S. Textile and Apparel Imports From Various Countries/Areas in 2006 269

Figure 2-11-5 Breakdown of Synthetic Fiber Uses in 2006 279

Figure 2-11-6 A Brand Creation Model 280

Figure 2-11-7 REACH Registration Timetable 287

Figure 2-12-1 Total Equity Raised by Biotech Industry 1996-2007 296

Figure 2-12-2 Composition of Taiwan’s Biotech Companies 308

Figure 2-12-3 Taiwan’s Biotech Industrial Output 2003-2008 308

Figure 2-12-4 Output Distribution of Different Sectors in Taiwan’s Biotech Industry 309

Figure 2-12-5 Biotech/Pharmaceutical Industry Investments in Taiwan 311

Figure 2-13-1 Global Pharmaceutical Market 1999-2007 317

Figure 2-13-2 Taiwan’s Drug Market 1999-2006 321

Figure 2-13-3 Market Size for the Drugs with Patents expired between 2005-2009 330

Figure 2-14-1 Medical Device Industry Value Chain 338

Figure 2-14-2 Medical Device Industry Product Classification Connection Chart 341

Figure 2-14-3 Medical Device Market Worldwide 2004-2010 342

Figure 2-14-4 Analysis of the Competitiveness of Taiwan’s Medical Device Manufacturers 344

Figure 2-14-5 Comparison of Number of Medical Device Related Patents Worldwide 348

Figure 2-15-1 Taiwan’s Consumer Price Index of Perishable Foods of Dec.2005-Nov.2007 365

Figure 2-15-2 Taiwan’s Consumer Price Index of Processed Foods Dec.2005-Nov.2007 366