Delta Electronics Inc.
Envisioning a US$100b Opportunity
The question burning in the back of Delta Electronics chairman Dr. Bruce Cheng's mind for decades: How to address energy, environmental and climate problems while preserving business development? Delta now believes it has found the answer.
Envisioning a US$100b OpportunityBy Ching-Hsuan Huang
From CommonWealth Magazine (vol. 417 )
It's February, but it's already over 30 degrees in southern Taiwan and the scorching rays of the sun beating down on the solar panel-covered roof of Kaohsiung's World Games Stadium cast a blinding reflection, an appropriate reflection of Delta's dazzlingly bright future prospects.
This particular Delta project will formally open in July with the start of the World Games. With 8,844 solar panels carpeting its roof, it will be the world's largest single-edifice solar installation, capable of generating 1.1 megawatt hours per year of clean electricity and thus reducing carbon dioxide emissions by 6.6 million tons.
Having started life as a component maker with virtually no experience in engineering such vast systems, Delta's first foray in the field is of world-record scale.
."I've been really working hard these past few years hoping to make not just a product but an entire system,." Delta chairman Dr. Bruce Cheng begins. ."But in all honesty I never thought I'd shoot for something so big,." he adds with a laugh.
Saving the Planet: Business Ops Unlimited
So how does one solve energy, environmental and climate problems while still attending to the needs of business development? That's the question over which Cheng has been constantly wracking his brain for 30-odd years. Recently, the answer has gradually dawned on him.
As management guru Michael Porter, who has recently turned his attention to the issue of corporate social responsibility, affirms: ."Many opportunities to pioneer innovations to benefit both society and a company's own competitiveness can arise in the product offering and the value chain.."
Delta Electronics is one of the few Taiwanese companies to have struck a balance. In taking global issues into consideration, Delta has created for itself limitless commercial opportunity.
By ceaselessly working to increase the power conversion efficiency rate of its equipment from 60 percent to more than 90 percent, in the last three years Delta has not only saved 40 gigawatt hours of power from being consumed by 100 million computers worldwide, but in the process has also become the world's number-one maker of power supplies. Its solar power inverters, with their 98-percent power-conversion efficiency rate, are the only foreign-made ones sold in Japan.
Now Delta wants to extend its core competence in the power supply sector into the development of solar power and wind power generation systems.
The change is evident in Delta's corporate mission statement. The company long characterized itself as a provider of high-efficiency power supplies.
"Now we want to solve global problems. Our mission is to become a solution provider,." says Delta CEO Yancey Hai. ."To be a solution provider, we must extend our core competency into the power-generation stage."
Delta's client list has gotten larger as a result, encompassing major conventional IT players and even various national governments and power supply companies.
Actually, for Delta, the world leader in power supplies, power inverters and wind turbines, taking the next step to integration of renewable energy systems was a natural development.
."In the past, developing power inverters was what we were most suited for at the time. We now feel working in renewable energy is the most appropriate thing. We can make a contribution to society, and it dovetails with our product development – we only have to expand a little,." says Cheng.
The solar installation crowning Kaohsiung's World Games Stadium, for example, is the result of a marriage of the Delta-invested solar cell manufacturer DelSolar Co. Ltd. and the solar inverters developed in Delta's R&D division.
And in working together with Intel to develop cooling fans for quad-core CPUs, Delta developed miniaturized wind turbine systems.
With the completion of the Kaohsiung stadium project, Delta is already at work on its bid for a solar power installation at Taipower's Taichung Thermal Plant, an even bigger project with a total capacity of 1.5 megawatts.
With such successes, and an international-level case under their belt, ."we're feeling bolder,." says Hai.
Delta has also embarked on some international ventures, including in India, where it has assembled a team to lay the groundwork for participation in public infrastructure projects, and it is also now eying the U.S. market, which has been slower to develop than Europe. One target firmly in its sights is a university planning construction of a solar power generation-equipped parking garage.
Serendipitously Dodging the Downturn
Amidst a rapidly deteriorating global economy, Delta has not had any reduction in workforce or unpaid leave for employees and has even continued to expand its research and development center. Part of the reason for that has been the new business ventures developed as a result of a constant dedication to resolving global environmental issues.
."I wouldn't say we haven't seen an impact from the downturn. But we do have new products, and while there has been a drop in orders, we've been able to transfer over some of those people with a grounding in new products, to speed development of the next generation of new products,." Cheng notes.
Cheng estimates that market demand for the company's conventional computer peripherals will decline 20 to 30 percent as a result of the global financial meltdown. Cheng expects that new power generation and systems integration products will provide the impetus to help fill the gap between that expected decline and the 20 percent-plus annual growth rates to which Delta had grown accustomed in years past.
."Systems are actually the best sector in the current phase of solar power development,." says Christine Wang, an analyst with HSBC Securities. Prices have been dropping across the board for solar wafers, solar cells and solar modules, and there is no sign of an upturn in the short-term. But price quotes for downstream systems, Wang points out, are virtually unchanged and profitability remains good.
Taking the Kaohsiung stadium project, a NT$300 million deal, as an example, Hai projects that with the market still in its infancy, Delta stands a good chance to replicate that successful experience around the world, with dozens, if not hundreds, of such commercial opportunities at a similar economic scale.
In fact, aside from new power technologies, energy-saving LEDs, which consume 65 to 75 percent less power than conventional light bulbs, are also a focus of Delta's R&D efforts. In January Delta announced it had completed development of a line of advanced LED lighting products, including the most efficient streetlights currently available.
This presents an enormous opportunity in the US$100 billion-plus lighting market. In the downstream LED systems integration sector, Delta can bring its more than a decade of accumulated experience in ."power-to-light." technology to bear.
."The biggest problem with your average LED systems integrator is they don't understand electricity,." says Chiang Wen-hsing, director of the Fixed Lighting Department of Delta's Electronic Components Division.
Delta's LED research and development group has been in close communication with the solar systems team that completed the Kaohsiung stadium project on how to power LED streetlights via solar power systems.
With the addition of energy saving products to its line of renewable energy products, Delta is committed to becoming an exemplary global citizen.
."To do something, to make a contribution to the world, and still make some money and keep the company going – isn't that a good thing? This is something every company should be able to do,." Cheng says, demanding not only of himself, but also expecting even more companies to join in the effort.
Translted from the Chinese by Brian Kennedy
Delta Electronics Inc.
CSR Large-scale Enterprise No. 2
Consolidated Revenue for 2008: NT$142.3 billion
Consolidated net profit after tax for 2008: NT$10.3 billion
Chinese Version: 鄭崇華看見千億美元綠商機