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Taiwan's New Strength: Industrial PCs


Taiwan's New Strength: Industrial PCs


Despite recent economic downturns, one sector is managing to thrive. Industrial PCs, long unnoticed, are now seen as the future backbone of the emerging Internet of Things.



Taiwan's New Strength: Industrial PCs

By Liang-rong Chen
From CommonWealth Magazine (vol. 581 )

Taiwan's technology industry is facing the most acute crisis since 2008's financial collapse. Since the global stock market came crashing down in mid August, nearly one-half of Taiwan's tech stocks have plummeted to below net value.

The top four Taiwanese tech brands, Acer, Asus, HTC, and D-Link, have been knocked back down to just 10 percent of their respective market values during the local tech industry's heyday. Meanwhile, assembly, OEM, and parts manufacturers face severe challenges from China's "red supply chain."

While brands and contract manufacturers are mired in an unprecedented bottleneck, and panic has taken hold among the tech crowd, only one group retains its luster.

In the past, they manufactured robust, durable industrial personal computers for use on production lines. Now having defeated major German and U.S. makers, they can proudly claim yet another "world number one" title for Taiwan.

"Taiwanese companies account for half of the world's industrial personal computer (IPCs) companies. I can proudly state that Taiwan is the king of IPCs," says K.C. Liu, president and CEO of Advantech Corporation.

Internet of Things Backbone

Now they are in the midst of a transition to producing peripheral "smart devices" with wide applications in daily life. More importantly, these smart devices are the backbone of the coming Internet of Things.

For instance, Adlink Technology, which has delved the deepest in the technology, has partnered with the Industrial Technology Research Institute (ITRI) to develop a visual guide robot (VGR), which is expected to find wide Internet of Things applications in manufacturing and retail, holding tremendous potential.

Now Advantech, the world's biggest industrial PC company, is staging a dazzling coming out after 32 years of keeping a relatively low profile.

Just a few years ago, members of the industrial PC sector, which was lumped together as "computer companies" with Taiwan's Big Five ICT makers recording annual revenues in the hundreds of billions of NT dollars, were often seen as small- to medium-sized enterprises.

With just over NT$30 billion in revenues, Advantech has a market value of NT$130 billion thanks to its 40 percent profit margins, Internet of Things issues, and foreign investors interest. This is approximately the combined market value of Compal Electronics and Wistron, which have revenues of NT$800 billion and NT$600 billion, respectively.

Meanwhile, Foxconn's industrial PC OEM brand, Ennoconn, has turned heads with rapid growth of over 40 percent for two years running.

Ennoconn's stock has skyrocketed since going public in 2014, still sitting proudly atop all comers in the computer realm at around NT$300 per share. The performance earned special mention from Foxconn CEO Terry Gou at the company's shareholders meeting, and they continue to expand production facilities despite the bracing chill blowing through the local technology field.

A Quiet Revolution

Protech Systems, which has quietly made a fortune as a major supplier of convenience store electronic ticketing kiosks, recently invested in a new 33,000-square meter plant in Badu, outside Keelung. The company, which is not publicly traded, is now looking to go on a hiring spree to staff the facility.

Meanwhile, completion of Advantech's new Linkou plant is projected for the second quarter of 2016. The facility is expected to provide 3700 jobs.

This symbolizes a quiet paradigm shift, where victory goes to whomever learns and transitions the quickest. The high volume, rapidly-moving consumer electronics industry, having come on like gangbusters, is stepping back and yielding to low-volume, diversified, yet highly profitable Internet of Things businesses.

This is the future direction of Taiwan's high tech industry: from hardware design and manufacturing, to software system designers, offering solutions for smart living.

Translated from the Chinese by David Toman