2021
INDUSTRIAL TRANSFORMATIONREPORTTHE 5 BROTHERS OF ELECTRONICS

1

Editor’s Note

02

Overview of Taiwan’s Technology Industry03

The 3 Central Pillars of the
Taiwan Technology Scene

04

Trend of Taiwan’s Corporate Innovation

06

Case Study on 5 Brothers of Electronics

14

Looking Into the Future of
Taiwan's Corporate Innovation

34

Acknowledgements

35

Editor’s Note
In recent years, innovation and entrepreneurship has become a global
phenomenon and trending buzzword, more and more countries
around the world have been actively involved in startup investments
to get a head start in the latest generation of technology development. Taiwan has also been actively powering innovation through thedevelopment of its own startup ecosystem.
Today, Taiwan is regarded as one of the high-tech powerhouses in theworld with its strong foundation on hardware technology. But how
did Taiwan end up having this role in the global tech manufacturing
supply chain today? How are Taiwan's corporations evolving? What
are the innovation trends in Taiwan? In this report, we will showcase
the evolution of the Taiwan Tech scene, analyzing how Taiwan’s corporationsis handling “Corporate Innovation” and how “Coporate Innovation” has developed from era to era, along with case studies of big
players in the corporate innovation scene.
Within this report, we want to showcase the comprehensive ecosystem and innovation capabilities of Taiwan. We want to share with you
how this high-tech empire was built and the latest innovation trends
happening in Taiwan. Hopefully after reading this report, we caninspire you to learn more about everything happening in Taiwan, andeventually one day, invest in Taiwan.

2Overview of Taiwan’sTechnology Industry
First Beginnings
Before we talk about Taiwan’s corporate innovation scene, we must begin
from the roots of the semiconductor industry, as Taiwan’s technologicalfoundation is mostly built from it.
To begin a story about Taiwan’s path to becoming the high-tech global
powerhouse it is today, we must take you back almost 50 years to theperiod of 1973-1977.
The year is 1976 and Taiwan’s newly created Industrial Technology
Research Institute (ITRI) formed just 3 years ago in 1973 has just signed
the “Complementary Metal–Oxide–Semiconductor (CMOS) Integrated
Circuit (IC) Technology Transfer Licensing Agreement” with the Radio
Corporation of America (RCA) on March 5, 1976, under which RCA would
transfer its know-how in CMOS technology to Taiwan. Most importantly,
the agreement also included sending 19 young Taiwanese engineers to
RCA’s facilities for training in IC design, process technology, IC testing,and semiconductor equipment. In the meantime, ITRI was completing
pilot runs at Taiwan’s first 3-inch wafer fabrication plant towards the endof 1977. This plant would later be managed by Chintay Shih, one of thoseseed engineers who trained at RCA.
Notable among the 19 exchange engineers at RCA were Bob Tsao, emeritus chairman of United Microelectronics Corp (UMC).; Tsai Ming-kai, chairman of MediaTek Inc.; and F.C. Tseng, vice chairman of Taiwan Semiconductor Company (TSMC) and former ITRI President Chintay Shih.
Fast forward to 2021, Taiwan exhibits notable qualities that allows it tocontinually lead the world in developing cutting edge technologies andrank the best annually among its peers in the Asia-Pacific (APAC) region.
In fact, based on the 2019 World Economic Forum (WEF) ranking, Taiwan
was ranked 4th globally for its innovation capability, showing the worldthat Taiwan is one of the most innovative countries in the world.

3

The 3 Central Pillars of
the Taiwan Technology Scene
Supporting Taiwan’s continued excellence are 3 central pillars that are the vitalcogs that we’d like to share with you in this section.

University Graduates, Tech-savvy Talents,and Human Resource Advantages
Complementing all successful enterprises is great talent. A capable pipelineof STEM graduates ranks as one of the most critical elements for Taiwan’s
leading corporations to continue their leadership positions and technicalexcellence. According to the International Association for the Evaluation of
Educational Achievement, over 600,000 students from 64 countries wereassessed in both the subjects of math and science. Taiwanese students agedten (10) years old and fourteen (14) years old ranked in the top five in bothmath and science among their international peers in those same categories.
In addition, the cabinet level National Development Council (NDC) alongwith its investment vehicle National Development Fund (NDF) has set forth
programs that will maintain Taiwan’s competitiveness.
The NDC’s 2030 goal of transforming Taiwan into an English-Mandarin bilingual nation is already underway with support from the Executive Yuan. The
bilingual nation effort will better prepare the next generation of Taiwanese
to be better equipped to join the digital technology workforce required for
Taiwan’s major tech corporations. In addition, The NDC’s Department of
Human Resource Development has also amended the “Act for the Recruitment and Employment of Foreign Professionals” to open up opportunities
for international digital talents to bring their skills and knowledge to Taiwan
through programs such as the Employment Gold Card. The Gold Card program allows professionals in a variety of industries to work and reside in
Taiwan with specified tax and entry visa benefits. Taiwan’s already strong
talent pool along with an influx of international digital talents positions corporations in Taiwan to increase their competitiveness globally.

4

Advantages of Taiwan’s Upstream,
Midstream, Downstream Supply Chain
Globally, Taiwan plays a critical role in the production of Information and Communication Technology (ICT) products that everyday consumers and companies
need to operate their businesses. Notable examples for this include the manufacturing of smartphone components in almost everyone’s pockets to laptops usedby students and office workers. In fact, everything from Smart TVs, Teslas, video
gaming systems, to the air conditioner in your home relies on semiconductors forthe “brain power” to allow you to make a call, drive home, or sleep comfortably atnight.
Taiwan’s position as a key partner in the global ICT industry can be attributed to
the leading Taiwanese corporations whose services and products impact theentire supply chain of the semiconductor industry.

Government Support Towards
the Taiwan Tech Scene
The monumental task of fostering Taiwan’s talent pool, providing the needed
resources for Taiwan’s chip suppliers and ensuring emerging technologies such as
healthcare, electric vehicles, and Artificial Intelligence (AI) are also incubated has
been the task of Taiwan’s central government.
Central to that theme is ITRI, which is a technology research and development
institution in Taiwan. ITRI plays a vital role in transforming Taiwan's industries fromlabor-intensive into innovation-driven. Its open lab and incubator have fosteredemerging industries and startups including well-known names such as UMC and
TSMC, which are now the world's top two semiconductor foundries.
One of the biggest Taiwan government initiatives to expand Taiwan into theglobal tech scene was the establishment of the Hsinchu Science Park, which was
an idea of building a science and technology ecosystem just like Silicon Valley. The
primary goal of founding the park at the time was to expand the size of theprivate economy and creative vitality of Taiwan. The location of the science parkis right next to the National Tsing Hua University and National Chiao Tung University. Like Silicon Valley, which is adjacent to Stanford University and University ofCalifornia, Berkeley. The science park was eventually built and opened in 1980 inHsinchu. The park now houses more than 400 high-tech companies, mainly
involved in the semiconductor, computer, telecommunication, and optoelectronics industries, and have been established in the park since the end of December
2003. Its 400-plus technology companies accounted for more than 10% of
Taiwan's gross domestic product since 2007.

5

Trend of Taiwan’s
Corporate Innovation
Why Innovation
This century-old question has been discussed over and over, why innovation? Why do corporations need to innovate?
Innovation is the key driving force for continuous growth. Corporationsin Taiwan mainly operate on the Original Equipment Manufacturer(OEM) or Original Design Manufacturer (ODM) business model for
their main revenue stream, and mostly rely on internal research anddevelopment in creating the second growth curve; however, as the life
cycle of products, services, and technologies become shorter, the paceof internal innovation cannot keep up with various fast-evolving disruptive innovations and models. This is when corporations have to consider maintaining their momentum of innovation through external
forces such as investment, mergers and acquisitions of new ventures,or strategic cooperation models.
Corporations in Taiwan have always been heavily involved in the earlystage investment scene of the Taiwan startup ecosystem, as investingin startups or eventually acquiring teams have always been a strategic
method Taiwanese corporations are familiar with, or even built theirsuccess on. From 2015 to 2020, corporates or corporate venture capitals have been involved in 56% of the amount of early-stage investment deals happening in Taiwan.
With more and more new technologies developing, along with therecent global market shift from the pandemic, Taiwanese corporations
have to develop corporate innovation on a larger scale and at a faster
pace, in order to keep up with the innovation trends and to not get
washed away by new waves of disruptive innovation and technology.

6

Startup Investors in Taiwan
Accumulated from 2015 to 2020

Corporate/CVC

VC

NDF

Foreign Investors

56%

42%

17%

14%

791

593

248

200

Amount of Deals
From 2015 to 2020, corporates or corporate venture capitals have involved in 56% of theearly-stage investment deals in Taiwan.
Note that most investments involve multiple companies, VC’s, or investors, so the total
percentage is over 100%.
Source: FINDIT Team/ TIER

Methods of Innovation
While “Innovation” has long been the buzzword and the key enabler of sustainable growth among corporations both large and small, recently corporates have been shifting their innovation approach away from the traditional“closed/internal” (e.g., R&D) toward “open/external”. The traditional pathways are considered too slow to supply the rates of innovation required tosustain the business and its growth under fast-changing market trends,
ever-increasing industry competition, and rapid-growing technology innovation. According to KPMG’s 2020 Global CEO Outlook, over 80% of CEOs
believe the key is the ability to either continuously challenge existing thinking
and business norms or through disruptive innovative solutions. Since
COVID-19 affected all economic activities globally, corporations are evenmore enticed than ever to explore new ways to capture innovation and develop digital solutions externally through cooperation with startups. Anotherthing noticeable is, due to the pandemic affecting the economy, 80% of companies are speeding up the process of innovation and digitalization, with 40%
of companies even estimating this process to be a few years earlier than their
original plan. Looking ahead, the fastest and most efficient way to engage
upon digital transformation for corporations is to work with startups, adopt
their innovative technologies, and most importantly incorporate their entrepreneurial spirit into their corporate culture and business.

7

Global Corporate Innovation History

1960s - 1980s Era of Industry Giants
In the 1960s, innovation was mainly confined to researchers, R&D
departments, and laboratories, who steadily pushed the boundaries
of technology in support of the corporation’s next generation of
offerings. Internal R&D was viewed as a strategic asset and even abarrier to competitive entry in many industries. At the time, only
large companies with significant resources and long-term research
programs would have the resources to compete.

1990s: Digital Disruption and the Rise of Open Innovation
In the 1990s, online opportunities emerged due to the rapid growthof the Internet, which allowed corporations to reach a much larger
audience more quickly. Software also scaled faster than offerings
from traditional industries, e.g. manufacturing. And the venture
capital model was instrumental in funding innovative startups. The
combination of the digital revolution, venture capitalism, andfast-changing consumer behavior enabled market disruptions.

2000s: Emerging of Future Technologies
Since the 21st century, the rise of social networks and smart phones
have disrupted the market and created a fresh wave of new digital
innovation. Following the development of new technologies like AI,
IoT, Biotech, 5G, and Blockchain. Though we are only in the earlyphases of the digital revolution, corporations will continue to bechallenged to rethink their models to access, organize, and deploy
these technologies to benefit all of their business units.

8

Taiwan’s Corporate Innovation History
There are two key players in Taiwan's corporate innovation scene, just likethe Taiwan tech scene, ITRI and the Hsinchu Science Park play a huge rolein Taiwan's innovation scene. The development of these two support
pillars contributed heavily in Taiwan’s technological development andhave become the life line of Taiwan’s economy during 1980 to 2000.
Taiwan's venture capitalists (VC) also have a great impact on thehigh-tech industry and corporate innovation scene. Taiwan's VC industry
was introduced by Mr. K.T. Li in the 1980s with reference to Silicon Valley
practices to invest capital in high-tech industries. At the same time, ITRI
had cultivated a large number of R&D technologies and then spun theminto independent startup companies. The high probability of successmade the incentive for VCs to invest in more capital higher than ever.
In 1990, the newly implemented “Statute for Upgrading Industries” policy
had provisions on investment deductions for VC shareholders. This meant
as long as VCs invest in early stage teams in strategic industries, 20% of
the investment amount available to VC shareholders would be used todeduct personal income tax.
This policy incentivized more than 7 billion USD in venture capital toinvest in semiconductor-related manufacturing industries, which led tomore than 70 billion in USD funds from the hands of the general public
pouring into Taiwan. These large amounts of capital built the foundationof Taiwan’s strong semiconductor industry and forged Taiwan into thetech power house it is today. This also made 1995 to 2000 the golden era
for VCs with up to 40% of the investments involving early stage funds.
From 1986 to 2011, a third of every listed company in Taiwan received VC
funding. The NDF also invested 300 Million USD, which had a big impact
on attracting more international VCs to come to Taiwan to invest.

9

In 2000, due to equitable taxation and the principle of trade liberation,
the tax deductions for VC shareholders were canceled by the government. With the Taiwan stock regulation system restricting 10 NTDs per
share (Note 1), along with the number of teams derived from ITRI also falling, causing VCs incentive to invest in early stage startups to gradually
dissolve.
The Taiwan government’s "Challenge 2008 Sub-Project: International
Innovation R&D Base Project" (2002-2007) promoted the establishmentof 35 innovative R&D centers approved by the Ministry of Economic
Affairs (MOEA) in Taiwan by multinational corporations. These R&D centers all have technical cooperation or technology transfer relationships
with local Taiwanese manufacturers, and can receive subsidies from the
MOEA. So far, there are 59 similar R&D centers stationed in Taiwan (Note2). Compared to our counterparts in Asia, Taiwan has a better balance of
openness and technological capabilities, and has so much untapped
potential in innovation capabilities. Based on the 2020 IMD ranking,Taiwan is ranked 6th in scientific infrastructure and 10th in technologicalinfrastructure globally. We look forward to Taiwan’s corporations doing
more innovation experiments and expect it to gradually become a normal
practice for Taiwan corporations.
One thing to notice is Taiwan has a large number of inventions and outstanding talent, but the proportion of patent commercialization is far
below international standards. The main reason for this is the lack of earlystage funding (Note 3), most companies are not willing to take the risk ofdeveloping innovative solutions with a longer development curve andseek safer revenue options. The VC scene in Taiwan also lacks the willingness to invest in risky ventures, so it is more dependent on government
funding. The Taiwan IPO system is also a reason why many startups tend
to lean towards being merged by big corporations as the regulations
make it hard for startups to become a listed company in Taiwan. With the
Taiwan Stock Exchange recently launching a new trading platform,
making IPO an easier accessible option, we might see new exit strategies
for Taiwan startups in the future.

10

The Future of Taiwan Corporate Innovation
There are a few viewpoints we can look at when talking about Taiwan’s
future in corporate innovation.
In order to better orientate itself with international capital markets andgovernment’s policies towards innovation, the Taiwan Stock Exchange islaunching a new trading platform to make it easier for startup companies
to become listed on the Taiwan stock market. These companies usually
have limited capital or incur losses due to needed capital injection, buthave promising outlooks to raise funds for expansion and list on the
Taiwan Innovation Board (TIB) (Note 4). This opens up a new pathway
for startups to go public and increases the incentive for investors toinvest in startups early on and inspire more innovation in the future.

According to the WEF, Taiwan’s economy has
stepped into the innovation-driven stage since 2011
Average
IncomeInnovation-Driven

Factor-Driven1966

Efﬁciency-Driven

1979

Export Processing
Zone

2011

Science Park2016

Development
Stage

Asia Silicon
ValleyDevelopment
Plan

Source: World Economic Forum11

According to the WEF, Taiwan’s economy has stepped into an innovation-driven
stage since 2011. Taiwan has come a long way in terms of corporate innovation
since the 1960s. Starting from the factor-driven era of the 1960s to 1980, wheremost of Taiwan's economy came from OEM exports. Next off is the efficiency-driven “Science park era” of the 1980s to 2010, with cost-efficient OEM, ODM
manufacturing dominating Taiwan's capital market. This is also when Taiwan
introduced the high tech and semiconductor industries, setting the innovative
genes and foundation for Taiwan.
Starting from 2011, along with the NDC launching their Asia Silicon Valley Development Plan in 2016, promoting innovation and R&D for devices and applications of the internet of things (IoT), and upgrading Taiwan’s startup and entrepreneurship ecosystem, symbolizing Taiwan’s transition from efficiency-driven
to innovation-driven. Where strategic innovation is the new focus for corporations and the government to develop from a national level.
With new regulations being more friendly to early stage investors and startups,
along with more corporations noticing the need to innovate. Their heavy
involvement will only benefit the capital market and increase the talent pool of
Taiwan. We foresee a bright future for Taiwan’s innovation scene, as corporations have always been a driving force for innovation.

Note 1
Taiwan stock regulation requires a denomination of 10 NTD, which is equivalent to requiring all investors to hold at least 10 NTD per share. Based on datafrom the Taiwan Stock Exchange the average share price of listed companies
in Taiwan is about 30 NTD, multiplied by the average success rate of global
startups of about 30%, leaving the average return being 9NTD per share.
This means investing in early stage startups is almost always a loss for VCs
under these circumstances. With other profitable investment opportunities,
this type of transaction does not make sense for early stage investors. Normally Taiwan VCs would rather wait until a company is relatively stable witha success rate greater than 70% before they are willing to invest, but at thispoint, VCs are not needed for those companies that have a steady cash flow
and business model. Starting from 2014, listed companies can issue theirown denomination, and since then the “10 NTD per share” limit has been
eliminated.

12

Note 2
Including the first ever overseas server R&D center established by IBM,and the DuPont R&D center. Multinational corporations have expressed
their willingness to operate in Taiwan for a long time or expand their
R&D capacity in Taiwan through methods such as building new R&D
departments or purchasing land and building factories.

Note 3The Entrepreneurship Consulting Service Center of the Small and Medium-sized Enterprise Division of the MOEA conducted a survey ofentrepreneurial consultants and new entrepreneurs of SMEs. The
survey found that the first reason for entrepreneurship is "Realizing
personal ideals", and the biggest problem of entrepreneurial predicament is "insufficient venture capital" (Small and Medium Enterprise
Division (2012)).

Note 4To assist the development of innovation, improve fundraising channels,
and expand the scope of our capital markets, the Financial Supervisory
Commission (FSC) has announced that the TWSE and Taipei Exchange(TPEx) will establish TIB and the new board under emerging stock
market within its multi-tiered capital market framework to facilitate
innovative businesses in raising funds on the capital market.
The FSC has supervised the two exchanges to refer to international
capital market practices in order to ensure the function of the two
Boards, protect investor rights, and boost industry development. In
addition, the establishment of the two Boards has taken into consideration the difficulties that innovative new companies face, such as thegap between their preliminary business model and existing requirements for listing and public offering.
Taiwan Innovation Board and TPEx’s new board have launched officiallyin the third quarter of 2021. And is expected that this new initiative will
support innovative companies in raising funds on the capital market,
boost the development of the real economy, and strengthen the competitiveness of Taiwan’s capital markets.

13

Case Study on
5 Brothers of Electronics

Why these 5 Brothers of Electronics
The term “5 Brothers of Electronics” was first coined by Terry
Gou, the former Chairman and General Manager of the Foxconn
Technology Group, during the company’s annual shareholder’smeeting in 2003. The “5 Brothers of Electronics” referred to the
5 electronics manufacturing powerhouses from Taiwan at thetime: Quanta, Asus, Compal, BenQ, and Foxconn. The “5 Brothers of Electronics” are especially significant to Taiwan’s techindustry due to their global domination, annual gross revenues,
and number of employees. They are oftentimes used as abenchmark for Taiwan’s economic strength. Fast forward to 2
decades later, the consumer electronics industry in Taiwan
underwent an industry specialization to separate major brandmanufacturers and contract manufacturers. Nowadays, the “5Brothers of Electronics” usually refer to the five major
Taiwan-based ODM for consumer electronics devices, which
includes Foxconn, Wistron, Quanta, Compal, and Inventec. In
the following section, we will dive into how these “5 Brothers ofElectronics” are tackling innovation on their own, taking a sneakpeek at what the industrial transformation might look like in thenext few decades in Taiwan.

14

Industry
Electronics
Year Founded1974
Key Executive
Young Liu (Chairman and President), Terry Gou (Founder)
Headquarters
New Taipei City, Taiwan
Main Products and Services
Electronics, electronic components, PCBs,
PCB components, computer chips
Number of Employees
Over 1M worldwide

15

Company BackgroundFoxconn Technology Group is a Taiwanese multinational electronics contract
manufacturing company, also known as Hon Hai Precision Industry Co., Ltd.
Foxconn is the world's largest electronics contract manufacturer and thefourth-largest information technology company by revenue. The company isalso the largest private employer in China and one of the largest employers
worldwide.
Foxconn manufactures electronic products in various industries, including computer, automobile, communications, consumer product, medical, and defense
industries. Foxconn has produced notable products for major American, Canadian, Chinese, Finnish, and Japanese tech companies such as the BlackBerry,Apple, Amazon, Nintendo, Nokia, Google, Xiaomi, Sony, and Microsoft.

Current Strategic Transformation Focus
In the past decade and a half, Foxconn has been actively expanding into numerous industries through investments and partnerships. The company has emphasized on a “domestically reserved, internationally active” approach, whichmeans that Foxconn will scout for feasible solutions internationally and leverage the solutions to enhance its in-house capabilities domestically. Foxconn
Group has deployed a “3+3” transformation strategy to prepare itself for its
next stage of long term growth. The “3+3” transformation strategy covers threemajor industries and three different emerging technologies of the future. Goingforward, Foxconn will focus on electric vehicles, digital healthcare, and robotics
industries; and extend its capabilities in artificial intelligence, semiconductor,
and next-generation communications technologies.
To strengthen its technological capabilities, Foxconn also announced the establishment of the Hon Hai Research Institute, which has five major branches: Artificial Intelligence Research Center, Semiconductor Research Center, Next-generation Communications Research Center, Information Security ResearchCenter, and Quantum Computing Research Center. The research centers are
dedicated to strengthening Foxconn's technology and product innovation
pipelines. Its findings and results will serve as the main support for Foxconn's
development in the next five years, maintaining the company’s product competitiveness while exploring the group's entry opportunities into new businesses at the same time.

16

Timeline of Strategic Transformation
According to the data collected in a study conducted by FINDIT, Foxconn has
invested a total of 47 early-stage investments from 2015 to 2020, including 8 investments in Taiwanese companies. The investment amount exceeded 26 billion NTD,
with Taiwanese companies receiving more than 680 million NTD. Breaking down
Foxconn's investment strategy across various fields, the company has placed themost investments in artificial intelligence and IoT, while automotive technology,transportation, and manufacturing fields received the highest investment amounts.
However, after 2018, Foxconn's early investment trend has specifically focused on
artificial intelligence, healthcare, and automotive fields.
In the field of artificial intelligence, Foxconn invested in Cyber-Insight from China
and Carbon Relay from the U.S. in 2019, both focusing on providing smart manufacturing solutions. In the field of health technology, Foxconn invested in Nanox Imaging, an Israeli company that develops medical imaging technology, and Zap Surgical
Systems, an US company that produces radiosurgery machines used to treat and killcancer cells in the brain, head, and neck. In terms of automotive technology, besides
Zoox and Xpeng Motors, Foxconn also invested in a Taiwanese startup named
Noodoe in 2015, which provides electric vehicle charging solutions. Noodoe successfully obtained the OpenADR 2.0b certification in CES 2019, becoming the firstand only manufacturer in Taiwan to obtain such certification.

Corporate Innovation Playbook
Collaborative Workspace
Incubation SpaceInternal R&D

External Innovation Competition

Internal Innovation Competition
M&A

Strategic Partnership

Key Investments
StormForge - Series A as lead investor
Yungongchang - Series A as lead investor and Series B
PENSEES - Series A as lead investor
Light - Seed RoundZap Surgical Systems - Private Equity RoundNanox Imaging - Series B as lead investor
SigmaSense - Series A as lead investor
Kneron - Venture Round
GyroGear - Seed Round as lead investor

17IndustryODM (Original Design Manufacturer)Year Founded2001
Key Executive
Simon Lin (Chairman & CSO), Robert Huang (President & CEO)
Headquarters
Taipei City, Taiwan
Main Products and Services
Notebook PCs, Desktop systems, Server and Storage systems,
IA (information appliances), Handheld devices,
Networking and Communication products; Design,
Manufacturing and after-sales support service
Number of Employees
Over 80,000 worldwide

18Company Background
Wistron Corporation is an electronics contract manufacturer based in
Taipei, Taiwan. Originally a manufacturing arm of Taiwanese computer
powerhouse Acer Inc., Wistron spun off as an independent company in2000 to focus on contract manufacturing. The company is now one of
the few OEM/ODM companies with an annual revenue of more than
US$3 billion with more than 10 research centers and 12 manufacturing
sites around the world.
Wistron provides design, manufacturing, testing, and after-sales service for notebook and desktop computers, servers, storage, LCD TVs,
handheld devices, and devices and equipment for medical applications.
Wistron’s major international clients across its various product lines
include Hewlett Packard, Dell, Acer, Lenovo, IBM, Facebook, CISCO,
Tencent, and Microsoft.

Current Strategic Transformation Focus
According to Wistron’s latest annual report, the company will place anemphasis on the needs of the industry value chain of the future such as
artificial intelligence and 5G applications, continue to promote smart
factories and cloud management platforms to reduce costs, and invest
in emerging technologies such as industrial computers, professional
displays, and smart consumer devices.

19

Timeline of Strategic Transformation
According to FINDIT’s study, Wistron’s early-stage investments from 2015 to
the first half of 2020 totaled 27, while 16 of these investments went into
Taiwan-based startups. Wistron’s total investment amount exceeded NT$1.7
billion over this time span. Taiwan-based startups received more than NT$690
million, accounting for 40% of the total investment amount. Dissecting Wistron’s capital deployment strategy, its early-stage capital is mostly committed
to healthtech and artificial intelligence. Particularly in the field of health technology, Wistron not only made annual investments from 2015 to 2019, the total
investment amount in healthtech was more than NT$1.7 billion.
Looking into the Taiwanese healthtech companies in Wistron’s portfolio, it
includes Maya International Company, a SaaS startup that focuses on the development of clinical informatics, medical informatics, personal health management, and other healthcare-related information systems; Apollo Medical Optics,
a MedTech startup that focuses on developing high-resolution optical imaging
devices for tumor detection and medical beauty detection; FREE Bionics, aspinoff startup from the Industrial Technology Research Institute (ITRI) thatdevelops powered exoskeletons, exo-suits, and bionic technology products;
Aidmics Biotechnology, a company dedicated to developing a series of mobile
microscopic systems applied to the biomedical field; HuKui BioTech, a startup
focusing on medical electronics and handheld devices for digital healthcare
and telemedicine; PELL Bio-Med Technology, the first biomedical company in
Taiwan to specialize in the development of cell culture technologies and techniques for therapeutic applications; and VSense Co., a startup working on thedevelopment of diagnostic medical devices and biochips. It’s worth noting that
Maya International, HuKui BioTech, and PELL Bio-Med Technology received
follow-on investments from Wistron.
In the field of artificial intelligence, Wistron has placed its investments in Umbo
Computer Vision, an AI security surveillance company with a neural network-based artificial intelligence technology who received a follow-on investment in 2018; MoBagel, a startup with an artificial intelligence and machinelearning platform that helps corporate data teams make more AI-driven business decisions.

20Corporate Innovation Playbook
Collaborative Workspace
Incubation SpaceInternal R&D

Corporate Accelerator

Internal Innovation Competition
M&A

Strategic Partnership

Key Investments
Lucid - Seed Round
Airdog - Series A as lead investor
Soundbrenner - Seed Round as lead investor
WiBASE - Series A as lead investor
SuitX - Series B as lead investor
MoBagel - Series A
ANIWARE - Seed Round as lead investor
iKala - Series B as lead investor
InfuseAI - Series A as lead investor
Jubo - Series A

21

IndustryComputer hardware, electronics
Year Founded1988
Key Executive
Barry Lam (Founder and CEO)
Headquarters
Taoyuan City, Taiwan
Main Products and Services
Notebooks, Smartphones, Servers, Digital televisions
Number of Employees
Over 70,000 worldwide

22Company Background
Quanta Computer is a world leading electronics contract manufacturer
based in Taiwan that is best known as the largest notebook computer
producer in the world. Founded in 1988, Quanta Computer secured
important customers in the early 1990s such as Apple and Gateway,paving the way for its later success. For years since 1996, Quanta Computer was a major contract manufacturer for Dell Computer Corporation. The company is also known for helping with the turnaround of
Hewlett-Packard’s notebook business in the late 90s. Fast forward two
decades, Quanta Computer is now consistently ranked in the Fortune’s
Global 500 list and produces about a third of the world’s notebook
computers.
Quanta Computer now engages in the development and manufacturing of notebook PCs, servers, IoT products, HD encoding cameras, andindustrial computers. The company also designs and manufactures
wireless communication products, multimedia products, and global
positioning system (GPS) products. Its major customers include Apple,
Dell, Hewlett-Packard, Acer, Alienware, Amazon, Cisco, and more.

Current Strategic Transformation Focus
With the increase in notebook computer alternatives, Quanta has also
extended its product lines to cloud computing business, enterprise network solutions, mobile communications products, smart home products, autotronics, smart healthcare, IoT, and AI applications.
In the next 3-5 years, Quanta is optimistic about the opportunities
brought by artificial intelligence and 5G. Both cloud and IoT will growsubstantially with the rise of artificial intelligence and 5G. In the nextten years, Quanta will focus on the integration opportunities of artificial
intelligence, cloud, 5G, and IoT. Quanta will concentrate on what it calls
the “New 3C” technologies and applications to continue the enhancement of its core capabilities – Cloud Computing, Connectivity Technology, and Client Devices – as the foundation of its future development.

23

Timeline of Strategic Transformation
From 2015 to the first half of 2020, Quanta made 9 early-stage investments. 5of these went into early-stage Taiwanese companies. The total investment
amount exceeded NT$490 million.
Quanta's early investments are highly concentrated in healthcare technology
with a total of 6 investments in the field from the given time horizon above.
Among them, the Taiwanese startups that have received investments from
Quanta include OSTAR, a company dedicated to providing the best predictive
patient monitoring systems for blood pressure; QT Medical, a medech company
specializing in cloud-connected cardiac monitoring devices; aetherAI, a medical image AI startup with a special focus in digital pathology. aetherAI has
grown exponentially since its funding in 2017. The company's staff number has
grown from 4 to 55 within 3 years and its revenue tripled during the same time.
aetherAI is not only collaborating with leading hospitals in Taiwan, but also
partnering with top medical centers in the US including the University of Pittsburgh Medical Center, looking to get an FDA approval and penetrate into the
US market in the near term. Currently, Quanta has already developed a smart
electrocardiogram monitoring device that combines the synergistic applications of edge computing and cloud computing technologies. In addition,
Quanta is currently working on a smart electronic stethoscope which could
benefit telemedicine and long term home care practices.
In addition to healthcare technology, Quanta also invests in the AR/VR field.
Quantum Optoelectronics, one of Quanta’s portfolio companies, produces
opto-mechanical modules for smart glasses, covering various types of lightsources, lighting system design, imaging lens, and virtual and real imaging
system design and integration. Many of these AR-related production lines havebeen completed and started shipping in small batches. Quanta expects that in
the 5G era, smart glasses and head-mounted displays will replace desktop
computers, laptops, and mobile phones as the next-generation computing platforms. At the same time, the technology will also be integrated into Quanta’s
smart medical roadmap through a high degree of integration in software, hardware and cloud architecture, providing solutions for hospitals or homes.

24Corporate Innovation Playbook
External Innovation Competition
Internal R&D

M&A

Strategic Partnership

Key Investments
Alventive - Venture Round
Lane15 Software - Series B
Mellanox Technologies - Series C
Nanosys - Series B
Tilera - Series C
Moduware - Convertible Note
Lumus - Series C as lead investor
Tier IV - Series A as lead investor
aetherAI - Series A as lead investor
Plus - Series D

25Internal Innovation Competition

IndustryComputer hardware, electronics
Year Founded1984
Key Executive
Rock Hsu (Chairman), Ray Chen (President & CEO)
Headquarters
Taipei City, Taiwan
Main Products and Services
Notebooks, PDAs, televisions
Number of Employees
Over 43,000 worldwide

26Company Background
Compal Electronics, Inc. is a leading Taiwanese original design manufacturer(ODM), producing notebook computers, monitors, tablets and televisions fora variety of clients around the world, including Apple Inc., Acer, Lenovo, Dell,
Toshiba, Hewlett-Packard and Fujitsu. The company was founded in June
1984 and is headquartered in Taipei City, Taiwan. It has business presence inmainland China, the US, Vietnam, Brazil, Poland and Mexico, and has morethan 6,000 employees. Compal stands as one of the top two largest contract
laptop manufacturers in the world along with its Taiwanese peer QuantaComputer.
Compal started out as a computer peripherals supplier and slowly transitioned into a notebook computer assembler, being known for producing
popular models for Dell (Alienware included), Hewlett-Packard and Compaq,
and Toshiba. The company now engages in the research, development,
design, production, and sale of computing, communications, and consumer
products. Its products include notebook PCs, liquid-crystal display products,
smart devices, ultrabook PCs, 2-in-1 PCs, all-in-one PCs, tablet PCs, servers,
auto electronics, smart home products, public displays, smart phones, smart
accessories, and wearable devices.

Current Strategic Transformation Focus
As part of Compal's efforts to expand, the company has been shifting awayfrom its core PC business and venturing into the industrial computer andmobile device sectors. The company now engages in products such as servers, wearable devices, and automotive electronics, in which the relevantbusiness segments have grown by more than multiples in the year of 2019.
Compal's long-established smart IoT business has also shown strong growth
momentum as the end market demand gradually emerges. It is worth notingthat Compal is quite active in the investment and deployment in smart
healthcare. According to its 2019 financial report, Compal has actively
invested in medical technology teams and has targeted precision medicine
and healthcare as the future direction of the company since 2015. Compal iscurrently collaborating with two hospitals to introduce 5G high-speed
private network connectivity for precision medicine developments. In termsof healthcare services, Compal has established 20 locations and is looking to
expand to 50 locations by the end of this year. Meanwhile, Compal will also
invest heavily into immune cell therapies.

27

Timeline of Strategic Transformation
From 2015 to the first half of 2020, Compal made a total of 10 early-stage investments. Taiwanese startups received 7 investments. The total investment amountexceeded NT$260 million, while the Taiwanese companies invested received
nearly NT$200 million.
Looking into the early-stage investment trends of Compal after 2015, investments in healthcare technology have the highest sustainability. The Taiwanesestartups that attracted Compal’s investments in 2016 include WowGoHealth, an
AI health promotion and precision solution provider; and Global BioPharma, an
immunotherapeutic vaccine maker. With healthcare big data at its core, WowGoHealth combines both its software and hardware capabilities into one cloud
enabled platform, providing a complete IoT and health promotion solution.
WowGoHealth has already been supporting various smart wellness centers withsmart exercising solutions for elderly patients, bringing together the knowledge
from rehabilitation doctors, psychiatrists, psychological counselors, and nutritionists to implement its product RINGOAL in their treatments. It helps theelderly increase muscles, women lose weight, and assist with muscle relaxationin sleep therapies. Global BioPharma is focused on developing immunotherapy
that can stimulate the body’s natural immune system to kill the human papillomavirus (HPV)-related diseases. It is reported that Global BioPharma will workwith US biotech firm Advaxis in the United States for cervical cancer, analcancer, and Phase II clinical trials for head and neck cancer and lung cancer. The
second phase of its experimental plan for the use of ADXS-HPV immunotherapy
to treat human papillomavirus non-squamous and non-small cell lung cancer has
been accepted by the FDA.
In 2019, HippoScreen Neurotech and Taiwan Intelligent Robotics Company both
received Compal’s investment. HippoScreen Neurotech is a company that specializes in brain wave signal processing, using artificial intelligence-assisted
diagnosis technology at its core, and aims to develop brain wave diagnosing
medical services that can effectively help doctors to determine the possibility ofdepression in patients in less than 90 seconds. Taiwan Intelligent Robotics Company is committed to developing high-performance, high-quality service-oriented robots or related products for automation in the service industry, which canbe used in entertainment, medical, catering, security, and other fields.

28

Corporate Innovation Playbook
Internal Innovation Competition
M&A

Internal R&D

Strategic Partnership

Key Investments
Transmeta - Venture Round
AtNetwork - Series B
Motion Computing - Series A as lead investor
HippoScreen Neurotech Corp. - Angel and Corporate Round29

IndustryComputer hardware
Year Founded1975
Key Executive
Shiren Wen (Co-founder), Yeh Kuo-yi (Co-founder),Cheng Ching-ho (Co-founder), Maurice Wu (President)
Headquarters
Taipei City, Taiwan
Main Products and Services
ODM for notebook computers, servers, and mobile devices
Number of Employees
Over 23,000 worldwide

30Company Background
Inventec is a Taiwan-based Original Design Manufacturer that engages in the research and development, manufacture and sales of various
electronic products. Founded in 1975 as a manufacturer of electronic
calculators, Inventec has grown to become one of China's largest
exporters with its major development and manufacturing facilities
located in China. The company is perhaps best known as the producer for electronic dictionary brand BESTA, which has been the leading
provider in English/Chinese and English/Korean electronic dictionaries.
The company's main products include portable notebook computers,
business computers, servers, storage devices, workstations, server
management software, application software, learning tools software,
cloud services software, and computer peripheral products. The
Company also engages in the manufacture of solar cells and modules
as well as the assembly and sales of communications and digitalassistant products. Inventec now distributes its products to Asia,
Europe and the Americas.

Current Strategic Transformation Focus
In the future, notebook computers and servers will remain Inventec’s
main product lines. However, in order to achieve technological andmarket breakthroughs, Inventec will accelerate innovation in thefollowing aspects: (1) widening the integration and application of AI,
5G and Industry 4.0 technologies; (2) building smart manufacturing
plants globally; (3) diversifying the layout of automotive electronics
and smart medical devices.

31

Timeline of Strategic Transformation
Using Inventec’s early-stage investments to speculate on the company’s strategic
direction in the next 3-5 years, it is shown that Inventec is heavily focused on building
its artificial intelligence capabilities. The company made 17 early-stage investmentsfrom 2015 to the first half of 2020. 9 investments went into Taiwan-based companies.
The total investment amount exceeds NT$370 million.
In 2015, Inventec placed its investments into DIITU and ucfunnel, both of which are AI
marketing firms. Inventec has also been investing heavily into the electronics sector. In
2016, Inventec invested into New E Materials, a company that provides sales services toelectronic chemicals used in manufacturing semiconductors, displays, and solar equipment. In 2020, Inventec invested in EMPass, which provides solutions for noise inhigh-speed electronic products. EMPass was originally established by a National
Taiwan University team in 2016. Its main customers include both domestic and foreign
brands and manufacturers of high-end electronic products, such as ASUS, Pegatron,
DELL, etc.
As for the healthcare technology sector, Inventec is not as active as other major electronics brothers. In 2016 and 2017, it invested in LivingPattern, which is engaged in daily
life pattern tracking of the elderly, including sleep and activity monitoring. The coretechnology of elderly care provided by the company includes behavioral pattern data
analysis, central control management, individual monitoring, home automation, etc.
The company won the runner-up of Chunghwa Telecom's IoT Platform Application
Competition in 2018.
In terms of the amount of investment, the top three sectors for Inventec are clean technology, electronics, and artificial intelligence. Molekule, a US air purification startup
established in 2014, received the highest single investment amount from Inventec,
reflecting its optimism about the air purifier market going forward.

Corporate Innovation Playbook
External Innovation Competition
Internal R&D

M&A

Internal Innovation Competition

Strategic Partnership

Key Investments
ThinkMagic - Series A
ucfunnel - Angel RoundCloudMosa - Series A

32

Looking Ahead For the 5 Brothers of Electronics

Following the above case studies on the 5 brothers of electronics in
Taiwan, it can be concluded that they share similar views on the importance of adopting emerging technologies within their businesses. AI, 5G,
and IoT have become the primary focus of development for these major
corporations going forward. Nonetheless, each brother is executing theirstrategy slightly differently. For example, Foxconn has committed todeveloping in-house automotive technology and intends to pivot to themobility industry as its main focus. Inventec focuses more on industrial
intelligence, in other words, the use of artificial intelligence in its smart
manufacturing developments. Quanta, Compal, and Wistron place moreemphasis on healthcare technology. However, it is worth noting that thefive brothers of electronics have all zeroed in on healthcare technology,
signaling their positive outlook on the growing importance of Taiwan’s
unique and robust healthcare system.
According to the statistics from Deloitte, global medical care expenditures will reach 8.7 trillion U.S. dollars by 2020, and the output value of
medical-related IoT applications will also grow to 158.1 billion U.S. dollars
in 2022. The business opportunities presented in the smart healthcare
sector have attracted tech giants such as Apple, Google, and Amazon to
pay close attention. Taiwan’s 5 brothers of electronics have also soughttransformation in response to changes in the environment in order to get
rid of low margins from their current contract manufacturing businesses.
As the 5 brothers of electronics invest heavily in health technology, perhaps it is only a matter of time before we hear the new term “5 brothersof medtech”.

33

Looking Into
the Future of
Taiwan's Corporate
Innovation
Looking into the future of Taiwan, one thing we have noticed
is that there is more and more corporate involvement in thestartup ecosystem beyond just investments, they are gradually becoming more aggressive in working with startups, andhave become more open-minded towards innovation. With
the pandemic impacting the market severely, innovation anddigital transformation is becoming the inevitable. With successful cases of corporate innovation like the 5 brothers ofelectronics, we are embracing a new era with more corporate
involvement in the Taiwan startup and innovation scene.
Like mentioned in previous paragraphs, looking ahead, thefastest and most efficient way to engage upon digital transformation for corporations is to work with startups, adopt
their innovative technologies, and most importantly incorporate their entrepreneurial spirit into their corporate culture
and business. With this mindset, along with the strong semiconductor and technological foundations, we foresee abright future for Taiwan corporate innovation scene.
We hope that through reading the report, you can get abetter understanding of what corporations and tech giants
in Taiwan are up to and planning on this long journey of corporate innovation. All in all, we think this is a very excitingtime for startups and corporations in Taiwan. The results wegathered in this report shows that the corporate innovation
scene in Taiwan is on a growing trajectory with big players
like the 5 brothers of electronics being heavily involved in thestartup scene in different ways and regulations being morefriendly for startups. We hope this evolves into a well-balanced and supportive ecosystem, and eventually makeTaiwan a robust ecosystem for corporations to initiate innovation and for entrepreneurs to start their startup journey.

34

Acknowledgements
The Industrial Technology Research Institute (ITRI)
https://www.itri.org.tw/english/

Introduction to the Hsinchu Science Parkhttps://www.most.gov.tw/folksonomy/list/a365d856-3247-4937-8c76-0488f488d6ee?l=en

World Economic Forum World’s 10 Most Innovative Economies
https://www.weforum.org/agenda/2019/10/these-are-the-worlds-10-most-innovative-economies/

Taiwan students rise in global math and science performance rankings
https://www.taiwannews.com.tw/en/news/4073533

Taiwan’s 2030 goal to become a bilingual nation(2019-01-11)
shorturl.at/gtuF0

The amended Act for the Recruitment and Employment of Foreign Professionals is approved by the Executive Yuan totake effect from today!
https://foreigntalentact.ndc.gov.tw/en/News_Content.aspx?n=F0746484B877D582&s=F2A5E8AABD078028

Overview on Taiwan Semiconductor Industry (2021 Edition)
https://www.tsia.org.tw/api/DownloadOverview?ID=31

2 charts show how much the world depends on Taiwan for semiconductors
https://www.cnbc.com/2021/03/16/2-charts-show-how-much-the-world-depends-on-taiwan-for-semiconductors.html

An Overview of the Top 5 Semiconductor Foundry Companies
https://www.nasdaq.com/articles/an-overview-of-the-top-5-semiconductor-foundry-companies-2021-10-01

Hsinchu Science Park - Wikipedia
https://en.wikipedia.org/wiki/Hsinchu_Science_Park

Largest Companies by Market Cap
https://companiesmarketcap.com/

KPMG’s 2020 Global CEO Outlook
https://home.kpmg/tw/zh/home/insights/2020/10/tw-ceo-outlook-2020.html

IMD World Competitiveness Center Rankings
https://www.imd.org/centers/world-competitiveness-center/rankings/

台灣創新體系與政策的探討及建議
https://www.cbc.gov.tw/tw/public/Attachment/51910122171.pdf

35

The Foundations of Corporate Innovation in the Digital Age
https://ide.mit.edu/wp-content/uploads/2018/05/The-foundations-of-corporate-innovation-in-the-digital-age.pdf

Assuring Taiwan’s Innovation Future
https://carnegieendowment.org/2020/01/29/assuring-taiwan-s-innovation-future-pub-80920

Taiwan: A Bright Future
https://www.forbes.com/custom/2019/07/15/taiwan-a-bright-future/

The Taiwan Startup Ecosystem Summary by Startup Universal
https://startupuniversal.com/country/taiwan/

Taiwan Innovative Board (TIB) - A Brand New Platform Clustering Innovative Listings
https://www.twse.com.tw/en/

Financial Supervisory Commission Press Release
https://www.fsc.gov.tw/en/home.jsp?id=54&parentpath=0,2&mcustomize=multimessage_view.jsp&dataserno=202012030003&dtable=NewsThe Asia Silicon Valley Development Plan
https://www.ndc.gov.tw/en/Content_List.aspx?n=90BEB862317E93FC

Taiwan Corporate Innovation Report by Taiwan Startup Stadiumhttps://static1.squarespace.com/static/54fda45ae4b056e88666306d/t/5ee9ad720b74bc3d9cfbd9ab/1592372921549/TSS+2020+Taiwan+Corporate+Innovation+Report.pdf

台杉投資-2019產業新創投資白皮書
https://www.taiwaniacapital.com/wp-content/uploads/2020/07/191023.pdf

36

Startup Island TAIWAN
Startup Island TAIWAN is the national startup brand of Taiwan.
The brand symbolizes a journey from a startup island to theinternational arena. It demonstrates to the world the strong
ambition and capabilities of Taiwan startup companies as wellas their intention and ability to contribute to other startup
ecosystems around the world.

©2021 Startup Island TAIWAN. All Rights Reserved.
This document is protected by copyright laws and contains material
proprietary to Startup Island TAIWAN. It or any components may
not be reproduced, republished, distributed, transmitted, displayed,broadcast or otherwise exploited in any manner without theexpress prior written permission of Startup Island TAIWAN.

37