The Hsinchu Science Park in northern Taiwan is one of the country's great sources of pride, but its golden reputation has shown signs of fading.

Sales by companies in the park in 2013 totaled nearly NT$1.1 trillion, lagging behind the record NT$1.19 trillion in revenues registered in 2010 for the third consecutive year and sustaining the park's 10-year period of flat revenue growth, park administration figures show.

The Hsinchu Science Park's sluggish decade reflects the general weakness of Taiwan's economy over that time, leading many to suspect that Taiwan's high-tech future needs to find a new path and new thinking that bypasses the park's formula for success.

A Second Wave of Tech Entrepreneurship

Across from the high-speed rail's Hsinchu Station in Zhubei stands a white, four-story building, its immaculate floor-to-ceiling windows especially drawing attention as they sparkle in the sunshine.

Move closer to the structure and one sees a few elliptical devices shuttling up and down the smooth, vertical windows, seemingly defying the forces of gravity.

The brainchild of Hobot Technology Inc. general manager George Chao, a former MediaTek Inc. employee, these "Hobots" are the world's first window cleaning robots, capable of cleaning a full glass pane automatically in 10 minutes.

A middle-aged engineer who grew up in a fishing village on Taiwan's northeastern coast and was never much for words, Chao launched his own company only three years ago, but he has already accomplished something that major Taiwanese household electronics brands such as Asustek, HTC and Tatung have failed to achieve – creating a completely new market and winning acclaim from consumers around the globe for a sophisticated design.

The Hobot, which costs 299 euros, is now on sale in 15 countries, and supply has failed to keep up with demand in Russia and China. It has proved so popular that Chinese and South Korean knock-offs have begun to pop up on the market.

Chao recalls that when he attended the 2014 Consumer Electronics Show in Las Vegas to try to make inroads into the challenging American market, he ran into his old boss, MediaTek president Hsieh Ching-jiang, who was shocked to see him and asked him, "What are you doing here?"

Chao says proudly that when his former MediaTek colleagues heard he was venturing off on his own, 80 percent of them doubted his chances for success. But not only has his startup made money in just three years, it also generously shared profits with its six employees this year.

"And the amount we distributed was no less than at MediaTek," Chao says, leaving his former colleagues envious.

Chao is only one of many ascending high-tech entrepreneurs leading a new wave of startups around Taiwan. The majority of this new group of upstarts previously worked at established high-tech companies such as MediaTek, Taiwan Semiconductor Manufacturing Company (TSMC) and even HTC, having fought battles in the global arena as high-paid executives earning more than NT$10 million a year.

Now that the industry's prospects have become uncertain, high incomes are no longer a given at Hsinchu's established companies, and their employees feel less bound by the promise of fortune. Having gained experience in life and a strong will not to serve as simply a cog in a big company machine, entrepreneurs are finding the courage to create a future they can call their own.

The New Cluster Effect

Located just across a river from the Hsinchu Science Park, Zhubei, with its boulevard-like streets and sparkling new buildings has become the new base for many former Hsinchu Science Park employees setting up new ventures.

The old Tai Yuen Textile site in Zhubei, which has six decades of history and was where Yulon Motor Company got its start in Taiwan, has been redeveloped into a stylish park consisting of more than 10 glass curtain wall buildings. Now known as the Tai Yuen Hi-Tech Industrial Park, the complex features tight security and enticing facilities such as restaurants, a swimming pool and basketball courts, and it has established itself as the home of Taiwan's main IC design house cluster.

NeoEnergy Microelectronics Inc., founded three years ago by former United Microelectronics Corp. chairman Jackson Hu, and M31 Technology Corp., founded two years ago by former Faraday Technology Corp. president H.P. Lin, not only chose the Tai Yuen Hi-Tech Industrial Park as their home, but set up shop in the same building.

Another high-tech veteran, former TSMC marketing vice president Genda J. Hu, located his touch IC design house FocalTech Corp. in another startup hotspot, the special development zone near the Zhubei high-speed rail station, after the company went public in 2013.

The building in which FocalTech is located is a five-minute walk from the station and houses over 100 FocalTech sales and R&D engineers on the eighth and 12th floors. Another six new technology startups, mostly IC design houses, also have their offices there, including Hon Hai Group subsidiary CN Touch, which is developing carbon nanotubes for touch screens.

The high-speed rail zone has four or five other buildings packed with dozens of new high-tech ventures. Aside from FocalTech, which went public six months ago, another company in the area gaining attention is startup MedSense Inc., founded by Benjamin Chiu, a former "future star" at MediaTek.

Despite a bright future at the company, he set off on his own without warning, surprising everybody.

"What they want to create are truly innovative products," says Liang-gee Chen, National Taiwan University's vice president for academic affairs and electrical engineering professor who served as Chiu's master's adviser. MedSense's founders include three individuals who were trained in Chen's NTU Communications and Multimedia Laboratory and have developed excellent interpersonal chemistry.

These top-notch technology talents along with a dozen or so veteran engineers from companies in the Hsinchu Science Park are dedicating themselves to developing a revolutionary mini blood pressure monitor. The concept behind the device is to use new electronic sensors to replace the traditional blood pressure meter and its cumbersome inflatable cuff. Once successfully developed, the product could create tremendous upheaval in this century-old market now worth billions of dollars. Initial stage products have already been developed and are expected to hit the market in two years. Perhaps just as importantly, the company has deep pockets because it is being bankrolled by some of MediaTek's senior statesmen, an increasingly prevalent trend in this digital surge.

Big 'Angels' In, Small Venture Capitalists Out

"Many of the new companies sprouting up in Zhubei have the support of top executives" from established Hsinchu Science Park companies, says Michael Kuo, a veteran venture capitalist and the director of the NCTU (National Chiao Tung University) Angel Club, which feeds young entrepreneurs capital.

These "big angels," worth hundreds of millions of Taiwan dollars, have come to replace the function of venture capitalists. This explains why despite a marked slowdown in venture capital activity in Taiwan in recent years, startups continue to sprout in areas neighboring the Hsinchu Science Park.

Citing MediaTek as an example, Kuo says the companies' first 100 or 200 employees are all worth at least NT$100 million and are looking for places to put their wealth to work.

"After amassing that much money, they don't necessarily want to start their own businesses. They may prefer to invest in younger colleagues and subordinates and support companies started by these 'future stars,'" Kuo says.

Combinatorial Innovation, Fast to Market

The main catalysts spearheading the Hsinchu Science Park's dizzying growth in its heyday were companies' ability to ride the global PC wave and seize "fast second-mover" business, but the current high-tech startup boom wave is different. New generation entrepreneurs like Chao are determined to be leaders rather than followers.

Chao invented his window cleaning robot after being hit by a sudden inspiration one day four years ago while cleaning his townhouse. Exhausted after scrubbing down his home's many windows, it came to him that, "nobody has designed a glass cleaning robot!"

He quickly searched patent directories around the world and decided immediately to throw himself into the product's development after finding that the concept was not registered. Having honed his skills in the CD-ROM field, Chao was extremely well-versed in the key technologies used in his second-generation "Hobot" – namely motors and signal processing – and he simply had to apply them to a new application.

Chao's story embodies the concept of "combinatorial innovation" coined by Google chief economist Hal Varian that has emerged as a popular prescription among Taiwan's high-tech heavyweights for escaping their low-margin predicaments.

C.K. Cheng, co-founder and general partner of Harbinger Venture Capital, says Taiwan's new generation high-tech companies would be best off following the Hobot example – applying existing core technical competencies to new product areas or even pioneering completely new product categories.

Full of admiration for the Hobot and its success, Cheng believes that Taiwanese vendors should consider moving aggressively into technologies related to people's daily lives, including domestic robots.

No More 'Me Too'

The former MediaTek star who founded MedSense shares a similar mindset. Holding his four-year-old iPhone 3GS, Benjamin Chiu believes tech devices have evolved so quickly they have far surpassed the needs of humanity.

"But there are also many other areas where needs still exist that nobody has really looked into," he says, explaining why he decided to get involved in medical electronics.

In fact, medical electronics represent one of the hotbeds of "combinatorial innovation" in Taiwan. Major companies such as Pegatron Corp. and LiteOn Technology Corporation are getting involved in the field. Many of them are investing in newly established companies that are developing advanced medical equipment, such as ultrasound monitoring devices, nuclear magnetic resonance imaging devices and even more niche-oriented non-mydriatic retinal cameras.

There is even one upstart in Zhubei's Biomedical Science Park – Chinan Biomedical Technology Inc., founded by an entrepreneur with overseas academic training – that is developing a multi-billion Taiwan dollar photon therapy machine to treat cancer patients.

The normally taciturn Chao can't help but get excited when talking about the new entrepreneurial zeal in the area. He firmly believes that Taiwan's tech sector cannot remain attached to the low-cost OEM "Hsinchu Science Park model" that has started to lose its luster.

"If no group willing to rock the boat emerges, Taiwan's economy will simply ride the ups and downs of global economic waves," Chao says.

M31 Technology's H.P. Lin adds that the days of "me too" – the idea of following others in making products that have already appeared on the market – are coming to an end. "From Day 1, Taiwan's new tech ventures need to take down the leaders in their respective fields, instead of engaging in 'me too,'" Lin insists. "This is the only way we have a chance."

'First-Mover's' Edge

The old strategies of "me too" and "fast second-mover" have lost their potency in Taiwan because they've been adopted by China.

One of the Hsinchu Science Park's biggest concerns this year is the expected rise in LCD panel capacity in China as several 8.5-generation factories come on line there, which figures to deal huge blows to the park's two major flat panel manufacturers Innolux Corporation and AU Optronics Corp. (Innolux is based in the Jhunan Science Park, which is part of the Hsinchu Science Park system.)

Confronted with the threat of the Chinese catching up, Taiwan's only hope is to forge completely new "first-mover advantages," much like Hobot's Chao.

He grabs a partially dismantled "glass cleaning robot" from his closest rival, a home appliances company in Suzhou. Compared with the "Hobot," the Chinese version comes off looking unwieldy.

That's because the "Hobot's" basic structure has been patented by Chao in many countries, and to get around the patents the Suzhou company added two wheels, resulting in a product that appears complicated and cumbersome and has drawn little interest from consumers.

A video comparing the two products posted on YouTube by Chao's agent in Germany shows them cleaning glass doors of the same size, and it's no contest. The light, agile Hobot takes less than half the time of its Chinese rival to leave its glass door sparkling clean, leaving no doubt about which is the better product.

Xindian's Software Alley

The Hsinchu Science Park has been dubbed "Asia's Silicon Valley," but it has yet to undergo the evolution seen in the real Silicon Valley, where the hardware kings of the 1990s, such as HP and Intel, have been supplanted by Internet and software giants Google and Facebook.

Silicon Valley has undergone another more recent change driven by the growth of social networking sites, which has shifted the digital center of gravity north to San Francisco's South of Market (SoMa) district. Once dilapidated brick-and-timber warehouses along the waterfront have been renovated and now house scores of startup communities and social networking companies, led by Twitter.

A similar emerging technology cluster has sprouted up in the Taipei suburb of Xindian. Home to an eclectic mix of residential and commercial districts and old industrial parks, Xindian is now ground zero for the burgeoning vigor of Taiwan's software sector.

At the beginning of this year, Asia's biggest security software company, Nuuo Inc., moved into the Taipei Sun-Tech Technology Park located near the Dapinglin Metro station, joining a cluster of Taiwan's software powerhouses such as Migo Corp., Cyberlink and Pubgame within a 500-meter radius straddling Xindian and Jingmei.

Rather than mirroring the traditional supply chain relations seen in the Hsinchu Science Park, the cluster effect emerging in this budding software center closely resembles that seen in Zhubei, with companies bonding together through old friendships and a common entrepreneurial spirit.

All over the country, a new wave of Taiwanese high-tech entrepreneurs are rising up and thriving by spurning the Hsinchu Science Park model and rejecting convention, instead tailoring available technologies to niche markets around the world.

In a special report in January, The Economist compared the entrepreneurial explosion in the virtual realm today with the "Cambrian explosion" that occurred about 540 million years ago. Taiwan is now experiencing its own "Cambrian explosion" in the tech sector, bringing new momentum to a country whose Silicon Valley remains stuck in neutral.

Translated from the Chinese by Luke Sabatier